BitcoinBTCAfter the US inflation report was released, the Consumer Price Index (CPI), the US headline Consumer Price Index, rose to its highest level for more than three decades.
BTC/USD Hourly Chart TradingView
Takeaways from the conference:
- Bitcoin was up as US CPI matched the expectations of economists.
- BTC faces downside risks in the short term as it continues to trade below key resistance levels.
May US inflation matched expectations
In May, the US CPI increased 4.2% over last year. The headline inflation rate increased by 0.5% on a monthly level, while the core inflation rate, excluding food and energy prices, rose 2.9% annually, and 0.2% from month to month.
US headline CPI and US core CPI. Bureau of Labor Statistics/Yahoo Finance
As renewed Middle East tensions pushed oil prices up, inflation fears re-emerged.
The report appeared to be bearish at first glance for Bitcoin. A higher inflation rate usually decreases the chances of Federal Reserve rate cuts and keeps Treasury yields high. It also tightens financial condition. It is usually a factor that puts pressure on crypto and other risk assets.
BTC increased because the inflation figure was better than expected.
The economists have already expected CPI headline to reach 4.2%. It was the same as forecast.
Investors didn’t see this report as being strong enough for the Fed to take a stronger stance. They were able to return to buying risky assets.
That gave Bitcoin the chance to bounce from long-term support zones, including the 200-week exponential moving average (200-week EMA, the blue line) and the psychological $60,000–$62,000 price floor area, as shown below.
BTC/USD chart for the week. TradingView
Bitcoin: Is it undergoing a bullish reverse?
Bitcoin’s post CPI rebound doesn’t yet confirm an entire bullish reversal.
BTC trades, from a technical standpoint, below important short-term support levels. These include the green 20-period SMA and the red 50-period SMA on the 4-hour chart.
BTC/USD four-hour chart. TradingView
BTC is also consolidating in a Bear Flag pattern.
After a rapid decline, the price will bounce back within a parallel channel that slopes upwards. This bounce is not necessarily the start of an uptrend, but rather a brief pause in the price before it continues lower.
A bear flag is confirmed by technical analysis when the price falls below its lower trendline. The measure of downside is equal to the projected height from the breakout point, of the last sell-off.
Bitcoins’ bearish target for June is $57,800, a drop of about 7.6% compared to current levels.
Bitcoin relief bounce scenario also in play
In contrast, a breakout of the support confluence – the SMA’s 20-period, 50-period, and flag trend line – would invalidate any immediate downtrend setup.
BTC/USD four-hour chart. TradingView
In that scenario, Bitcoin could extend its recovery toward the $64,000–$68,000 range in June, aligning with the 0.236 and 0.318 Fibonacci retracement lines.
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Source: cointelegraph.com
