Bitcoin may not be able to make good on its Bank of America pump if its daily close fails to impress.
Bitcoin price passes $32K with traders wary of ‘relief rally’ if resistance staysMARKET UPDATE
Bitcoin (BTC) passed $32,000 later on July 16 as positive reactions over Bank of America’s (BoA) Bitcoin futures go-ahead continued.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
Bitcoin nears $32,300 point of interest
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD rising 1.4% on the day to hit new local highs of $32,150 on Bitstamp.
The pair saw an abrupt reversal of trajectory on the BoA announcement, having previously tested $31,000 support repeatedly throughout the day.
As such, a key zone to retake for potential bullish continuation, $32,300, was now back on the menu, this seeming an unlikely goal just hours before.
For trader and analyst Rekt Capital, current levels are key when it comes to the daily close.
“BTC needs to reclaim orange as support if BTC is to maintain the upper half of this blue wedging structure,” he said alongside an explanatory chart.
“If BTC can’t reclaim orange as support, today’s recovery could merely be a relief rally to confirm orange as resistance.”
BTC/USD 1-day candle chart with wedging structure. Source: Rekt Capital/ Twitter
As Cointelegraph reported, on the lower end, $31,000 remained as a crucial breaker whose failure to hold would open the door to $24,000.
Altcoins pare daily losses
Bitcoin’s latest move had an instantaneous knock-on effect for altcoins.
Whereas daily losses across major cryptocurrencies were typically 5% on Friday, these swiftly dissipated and some altcoins even began posting gains.
Largest altcoin Ether (ETH) traded at $1,923 at the time of writing, launching towards the $2,000 level away from a support zone nearer $1,800.
ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView
A strengthening dollar could be negative for pretty much every risk asset on board, including Bitcoin, whose value boomed against the dwindling greenback after March 2020.
Big bullish pattern on US dollar index chart puts Bitcoin at risk of losing $30K MARKET ANALYSIS
Dollar traders have kept a close eye on a potentially bullish “inverse head-and-shoulders” pattern building in the U.S. dollar index (DXY) chart. Meanwhile, the smell of a stronger greenback is weakening Bitcoin’s (BTC) upside case, especially as the flagship cryptocurrency struggles to break out of its current $30,000-35,000 trading range.
Three troughs, one price ceiling
In detail, the inverse head-and-shoulders (IH&S) pattern forms after a downtrend. It contains three successive troughs, with the middle trough (head) being the deepest than the other two (shoulders). Ideally, the two shoulders are of equal height and width. All three troughs hang by a price ceiling known as a neckline that serves as resistance.
DXY, which measures the dollar’s strength against a basket of top foreign currencies, currently checks all the boxes to prove that it has formed an IH&S pattern.
The index now stares at the prospect of undergoing a bullish breakout upon closing above its neckline resistance. In doing so, it would set up a technical profit target at a distance equal to the price gap between the neckline to the bottom of the head.
U.S. dollar index’s inverse head and shoulder technical setup. Source: TradingView
The bullish setup expects DXY to rise by almost 5% on a potential neckline breakout move.
Meanwhile, the index’s 50-day simple moving average (50-day SMA; the blue wave) also anticipates to cross above its 200-day simple moving average (20-day SMA; the saffron wave) to confirm a Golden Cross. Traders consider golden crosses as bullish indicators.