Bitcoin has let go of the hefty 4% gains it attained post the declaration by the US Fed chair that interest rates will remain “unchanged” for now. For an interesting take on why interest rates matter to Bitcoin, read “Could Bitcoin’ Rally Be Indicative of US Fed’s Rate Hike Hold-off?”
As the cryptocurrency has weakened post the announcement, and there are no other market triggers in sight, we must remain cautious as Bitcoin is near important technical levels. Bitcoin is currently trading at $246.42, down 0.17% since yesterday.
In my previous analysis, I had mentioned that even with strong bullish backing, the rally to above $250-levels might not be easy, and I maintain that stance for today as well. Technical analysis of the 240-minute BTC-USD price chart indicates that the market may now take some to conduct a valuation check on the cryptocurrency.
Bitcoin Chart Structure – The above chart clearly tells that the Fed meeting turned out to be a “sell on news” event. Before Fed chair Janet Yellen released the final take on interest rates, the Bitcoin price jumped to $257.39 in high volatile trading. But the cryptocurrency has been sliding since then, touching the latest low of $243.
Moving Average Convergence Divergence – The MACD indicator has just crossed the Signal Line on the downside. However, the two values are still at their highs, with MACD at 4.6255 and Signal Line at 4.6606.
Momentum – The Momentum reading has fallen sharply since yesterday – it is down to 6.0600.
Relative Strength Index – The underlying strength is swiftly approaching the neutral level of 50. The latest RSI reading is 59.0940.
Bitcoin is currently trading at high valuations and it would only make sense to trade when the price is near the extremes. Initiate light buy positions when the price nears $240 by maintaining a stop-loss below $238.