The overall trend is bullish, meaning that Bitcoin will likely retest the resistance at $35,000.
- Buy the BTC/USD pair and set a take-profit at 34,000.
- Add a stop-loss at 31,000.
- Timeline: 1-2 days.
- Sell the BTC/USD pair and set a take-profit at 31,000.
- Add a stop-loss at 33,500.
The BTC/USD pair continued its bullish momentum as investors continued buying the dip. Bitcoin rose to a high of $32,100, which was the highest level since May 9th this year. It has made a strong recovery after rising by 27% from its lowest level in May.
Buying the Dip
Bitcoin had an eventful performance in May. It started the month by crashing to the lowest level since 2020 as Terra’s ecosystem imploded. Terra’s LUNA declined from over $180 to less than $0.0002 costing investors over $50 billion.
The decline also happened as investors reacted to the significantly hawkish Federal Reserve. In May, the Fed decided to hike interest rates by 0.50% and hinted that it will continue hiking by this pace in the next three meetings. It will then shift to 0.25% rate hikes later during the year.
Therefore, the BTC/USD pair declined as investors embraced the new normal of a hawkish Fed and a strong US dollar. The US dollar index surged to the highest level since May 2002.
Now, Bitcoin has made a strong recovery as investors buy the dip. The hope among buyers is that Bitcoin has become extremely cheap in the past few months and that its price will continue rising.
Bitcoin is also recovering as global inflation keeps rising. Data published on Tuesday showed that the Eurozone consumer price index surged to a record high in May. The trend will likely continue considering that the bloc decided to place an embargo on Russian oil.
Meanwhile, on-chain data shows that Bitcoin is having some inflows as investors buy the dip. Most importantly, options data shows that the put to call ratio has continued dropping, signaling that there are more bulls in the sector.
The BTC/USD pair has been in a consolidation phase in the past few weeks. As a result, it made a symmetrical triangle pattern that is shown in black. This week, it managed to move above this triangle, signaling that there are more buyers now. It has also risen above the 25-day and 50-day moving averages while the Relative Strength Index has moved to the overbought level.
Therefore, the overall trend is bullish, meaning that Bitcoin will likely retest the resistance at $35,000. The alternate scenario is where it retests the upper side of the triangle pattern through what is known as a break and retest pattern.