Why a $ 50,000 retest is likely ahead of Friday’s US job data

189
SHARES
1.5k
VIEWS
ADVERTISEMENT


Strong sales in the US dollar market late last week helped Bitcoin (BTC) climb above $ 49,000. However, BTC struggled to extend its surge above $ 50,000, a level of psychological resistance, as investors remained cautious about the Federal Reserve’s taper timing.

Bitcoin corrects after hitting its previous weekly high of $ 49,667. Source: TradingView.com

In detail, Fed Chairman Jerome Powell gave a slightly cautious outlook during his speech on Friday at the annual Jackson Hole Symposium. At one point, he failed to provide any indication of when the Fed would begin unwinding its $ 120 billion monthly asset purchase program.

Related articles

Powell noted that they would start tapering sometime in late 2021, but conceded that the rapidly spreading Delta variant of the Covid-19 could play spoilers.

“We will carefully evaluate incoming data and the risks that evolve,” he said.

“The timing and pace of the rejuvenation are not intended to be a direct signal regarding the timing of the rate hike.”

At the same time, the U.S. Bureau of Economic Analysis found that the annual core personal consumption expenditure (PCE) price, which the Fed sees as its preferred inflation measure, remained unchanged at 3.6%, about 1.6% above the central bank’s target.

Focus next week

In the first half of the week there are no major macroeconomic events that could directly or indirectly affect Bitcoin and the rest of the crypto market.

But on September 1, the Automatic Data Processing Research Institute (ADP) will release the August private sector employment data. Additionally, investors are likely to watch the ISM Manufacturing PMI for its paid component. In this way, they could measure price pressures on inputs to manufacturing to determine inflation.

On Friday, Non-Farm Payroll (NFP) data is slated to show that the U.S. economy created 763,000 jobs in August, about 19% less than 943,000 in July. As a result, disappointing job data could delay the Fed’s decision to scale back its asset-buying program and help drive up the price of risky assets, including Bitcoin.

Technical facility

Technically, Bitcoin has moved within a short-term ascending channel, suggesting a move towards the lower trendline (near $ 47,000) for a possible retreat towards the upper trendline (above $ 50,000).

Bitcoin 4 hour price chart with ascending channel pattern. Source: TradingView.com

A prolonged sell-off below the lower trendline of the channel could risk a plunge in BTC / USD exchange rates towards the 200-4H exponential moving average (200-4H EMA; the yellow wave) near $ 44,600.

Related: Bitcoin stands for “phenomenal” weekly closing when the BTC price is $ 49,000

The downside target appears closer to that seen on the weekly chart.

Establishment of the weekly Bitcoin price chart. Source: TradingView.com

The BTC / USD exchange rate tested the 0.786 line (near $ 50,779) on the Fibonacci retracement chart after moving up 75.36%. As a result, an extensive pullback move from said price cap will bring Bitcoin’s next downside target near the 0.618 Fib line (around $ 43,886).

Conversely, a neutral RSI reading (below 70) can help the bulls reclaim $ 50,000 for a bullish breakout. That way, they could aim for a level near $ 60,000 as their next upside target.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every step of investing and trading involves risk, so you should do your own research when making a decision.