Bitcoin edged lower on Wednesday as traders awaited the ongoing Federal Reserve officials’ meeting ending Wednesday.
The benchmark cryptocurrency fell 1.27 percent to $54,371 in the early London session, much in line with the US stock futures that had an incredible first half of the week after a strong Big Tech earnings session. Bitcoin was rising under a similar upside bias, anticipating that the Federal Open Market Committee (FOMC) would continue its pro-inflation policies despite signs of solid economic recovery in the US.
Bitcoin Technical Outlook
But Wednesday came up with modest downside surprises, led by profit-taking among daytraders as Bitcoin attempted to continue its Falling Wedge breakout move and target $58,000 as its primary upside target. The chart below shows the said Wedge.
In retrospect, Falling Wedges are bullish reversal patterns, confirmed when asset slides lower while forming a sequence of lower highs and lower lows. The downtrend eventually dies down after the price breaks out of the Wedge range, to the upside, and target levels at an equal distance as the Wedge’s maximum height.
Bitcoin targets $58,000 because it anticipates a 20 percent upside move following its break above the Wedge’s upper trendline.
The level also holds a history of providing strong resistance against Bitcoin’s bullish attempts during the first week of April. On the derivatives front, the strike price target is heavily skewed towards $52,000, which reduces the prospect of BTC/USD reaching $58,000 in the coming sessions.
A Bearish Shock Anticipated, Anyway
The chart above also shows Bitcoin breaking lower out of a Rising Wedge. In retrospect, Rising Wedges are bearish reversal patterns that form after assets trend higher while leaving behind a trail of higher highs and higher lows. They typically break below the Wedge support and drop by as much as their maximum height — a complete vice versa of the Falling Wedge pattern above.
Bitcoin eyes a drop towards $40,000-42,000 per the Rising Wedge pattern’s prediction. The BTCUSD derivatives market supports a bearish take, with the $48,000-level reflecting the second-highest strike price interest for the contracts expiring in the future.
“In days to come, BTC is likely to see another drop when the Turkish crypto ban arrives,” said Greg Waisman, the co-founder, and COO of Mercuryo. “However, after that, the coin should be able to start recovering properly from the level of $48,000.”