A Look At Bitcoin, Crypto Market Ahead Of The Fed's Interest Rate Decision: What To Watch

Zinger Key Points
  • Bitcoin is trading in a confirmed downtrend, making a consistent series of lower highs and lower lows.
  • Traders can watch for a break up or down from Monday's mother bar to gauge future direction.

Bitcoin BTC/USD was trading lower on Tuesday after dipping below the $19,000 level during Monday’s 24-hour trading session.

Monday’s dip proved to be a buying opportunity for the bulls, who caused the apex cryptocurrency to close the session slightly higher. On Tuesday, the bulls were comparatively weaker, although all of the price action was taking place within Monday’s range, setting Bitcoin into an inside bar pattern.

An inside bar often indicates consolidation is taking place. There are a variety of tools one can use for technical analysis, including from Ninja Trader. Ninja offers advanced charting and other products as part of its trading suite that are designed to assist investors with navigating the markets. The platform allows its members to automate and execute trades and to test trading ideas through simulation.

Bitcoin’s consolidation is likely in anticipation of the Federal Reserve’s upcoming decision on how high to hike interest rates, expected on Wednesday at 2 p.m. EDT.

Consumer price index data released by the U.S. Labor Department last week showed inflation remained elevated above expectations in August, despite four separate rate hikes initiated in March, May, June and July. The news brought fear that the Fed could hike rates by 0.75% or even by a full percentage point later this week.

Following the decision, Bitcoin — and the stock market’s — volatility may increase. Bitcoin's further direction, at least for the shorter-term, will likely become known. It should be noted the initial reaction on smaller time frames can be a “fake out,” and traders should exercise patience. 

Once Bitcoin chooses its direction, which will likely be in tandem with the S&P 500, the rest of the crypto market is likely to follow suit. 

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The Bitcoin Chart: Bitcoin started trading in a downtrend on Sept. 13 and has made a consistent series of lower highs and lower lows. Bitcoin’s most recent lower high was formed on Sept. 17 at $20,183 and the most recent lower low was printed at the $18,255 level on Monday.

  • During Tuesday’s 24-hour trading session, Bitcoin was printing an inside bar pattern, which leans bearish because the overall trend is down. Traders can watch for a break up or down from Monday’s mother bar on higher-than-average volume on Wednesday to gauge future direction.
  • If Bitcoin breaks up bullishly from the inside bar pattern, the crypto will regain the eight-day and possible 21-day EMAs as support, which would give bullish traders more confidence going forward. If the crypto is unable to regain the indicators as support, the eight-day EMA may continue to push Bitcoin lower.
  • Bitcoin has resistance above at $19,915 and $21,313 and support below at $17,580 and $16,000.

Photo via Shutterstock.

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