Bitcoin swings wildly as volatility in Fed expectations increases ahead of US CPI and FOMC decision

<p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">FUNDAMENTAL OVERVIEW</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"> </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">Bitcoin had a volatile end to last week. On Thursday, the price spiked to the upside after some dovish <a href="https://investinglive.com/central-banks/feds-waller-finally-seeing-some-signs-of-disinflation-in-recent-data/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Fed’s Waller comments</a>. Since he deviated from his usual hawkish stance, it triggered a dovish repricing in interest rate expectations which lowered the probabilities for a September rate hike.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">On Friday, bitcoin erased most of its Waller-driven gains as the <a href="https://investinglive.com/news/us-august-non-farm-payrolls-vs-56k-expected/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">US NFP report</a> showed job growth in August almost tripling the consensus estimate of 56K. This triggered a hawkish repricing which saw the probabilities for a rate hike in September returning to pre-Waller levels. </p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: normal; font-size: 15px;">This week, all eyes will be on the US CPI data. Unless, we get some surprising breakthrough in US-Iran relations, the price action will likely remain mostly rangebound or a bit negative for Bitcoin as traders at some point might start hedging into the CPI release. </p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: normal; font-size: 15px;">A soft or in-line CPI will likely give Bitcoin a boost as Fed’s Waller mentioned that he won’t consider a rate hike unless we get a hot CPI. Conversely, an upside surprise in core monthly inflation data will likely trigger another selloff on a hawkish repricing. </p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: normal; font-size: 15px;"> </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME</p><p></p><p>On the daily chart, we can see that Bitcoin spiked into the key 82,500 resistance after Waller’s dovish comments. The sellers stepped in there with a defined risk above the resistance to position for a drop back into the 76,000 support. The buyers will want to see the price coming back into the support to position for a rally into the 98,000 level next or wait for a break above the 82,500 resistance.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME</p><p></p><p>On the 4 hour chart, we have a downward trendline defining the bearish momentum triggered by the strong NFP as the market started to fade Waller-driven gains. If the price pulls back into the trendline, we can expect the sellers to lean on the trendline with a defined risk above it to keep pushing into the support. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the resistance, targeting a breakout.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME</p><p></p><p>On the 1 hour chart, we have another minor downward trendline which could act as resistance. The sellers might want to split their short positions in half to use both trendlines to target new lows. The buyers, on the other hand, will look for trendline breaks to pile in for a rally into the 82,500 resistance. The red lines define the <a href="https://investinglive.com/Education/trading-tip-know-the-average-daily-range-adr-20220207/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">average daily range</a> for today. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">UPCOMING CATALYSTS</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"><a href="https://investinglive.com/EconomicCalendar" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">On Thursday</a>, we get the US PPI report and the US Jobless Claims figures. On Friday, we conclude the week with the US CPI report.</p> This article was written by Giuseppe Dellamotta at investinglive.com.