BTC Bulls to Target a Return to $28,000 or Face Sub-$26,000

Key Insights:

• It was a bearish Wednesday, with BTC sliding by 3.07% to end the day at $27,250.
• Fed monetary policy and the Fed Chair Powell press conference pulled BTC to sub-$27,000 before wrapping up the day at $27,250.
• However, the technical indicators remained bullish, with $30,000 still in view despite the bearish session.

On Wednesday, bitcoin (BTC) slid by 3.07%. Reversing a 1.44% gain from Tuesday, BTC ended the day at $27,250. BTC revisited the $28,000 handle for the fourth consecutive day and printed a new 2023 high before hitting reverse.

After a choppy morning, BTC rose to a late afternoon high of $28,818 before hitting reverse. BTC broke through the First Major Resistance Level (R1) at $28,594 before sliding to a low of $26,591. BTC fell through the First Major Support Level (S1) at $27,471 and briefly through the Second Major Support Level (S2) at $26,830 before ending the day at $27,250.

Fed Chair Powell Sends BTC to Sub-$27,000 Levels on Policy Commitment

On Wednesday, the Federal Reserve raised interest rates by 25 basis points. While the rate hike aligned with market expectations, more hawkish FOMC Projections and Fed Chair Powell weighed on riskier assets.

The FOMC projections revealed an upward revision to the median Federal Funds Rate to 4.3% in 2024 while leaving the median for 2023 at 5.1%.

A change in forward guidance was insufficient to provide price support.

Powell discussed the possible influences of the banking sector on monetary policy, saying,

“We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.”

However, Powell reiterated the commitment to bring inflation to target, which was enough to send BTC deep into negative territory.

The NASDAQ Composite Index fell by 1.60% on Wednesday, with the Dow and S&P 500 seeing losses of 1.63% and 1.65%, respectively. This morning, the NASDAQ mini was up 12.75 points.

The Day Ahead

It is a relatively quiet day ahead on the US economic calendar. However, US jobless claims will influence the afternoon session. Economists forecast initial jobless claims to rise from 192k to 197k. Sub-200k levels would leave the Fed under pressure to push interest rates higher.

With US economic indicators on the lighter side, investors should continue to monitor the crypto news wires. Binance and FTX news and updates from the ongoing SEC v Ripple case will draw interest. Regulator and lawmaker attention will also influence as the US government and regulators shift attention away from the banking sector.

Bitcoin (BTC) Price Action

This morning, BTC was down 0.06% to $27,241. A range-bound start to the day saw BTC rise to an early high of $27,273 before falling to a low of $27,224.

Technical Indicators

BTC needs to move through the $27,553 pivot to target the First Major Resistance Level (R1) at $28,515 and the Wednesday high of $28,818. A return to $28,000 would signal an extended bullish session. The crypto news wires and the US economic indicators should be crypto-friendly to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $29,780 and resistance at $30,000. The Third Major Resistance Level (R3) sits at $32,007.

Failure to move through the pivot would leave the First Major Support Level (S1) at $26,288 in play. However, barring a crypto event-fueled sell-off, BTC should avoid sub-$26,000 and the Second Major Support Level (S2) at $25,326. The Third Major Support Level (S3) sits at $23,099.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bullish signal. BTC sat above the 50-day EMA ($26,637). The 50-day EMA pulled further away from the 100-day EMA, with the 100-day EMA moving away from the 200-day EMA, sending bullish signals.

A hold above the 50-day EMA ($26,637) would support a breakout from R1 ($28,515) to target R2 ($29,780) and $30,000. However, a fall through the 50-day EMA ($26,637) would give the bears a run at S1 ($26,288) and sub-$26,000. A fall through the 50-day EMA would send a bearish signal.