Bitcoin [BTC] downtrend continues but is it right time to go short

Dis­claimer: The infor­ma­tion pre­sent­ed does not con­sti­tute finan­cial, invest­ment, trad­ing, or oth­er types of advice and is sole­ly the writer’s opinion.

Fears that the Fed­er­al Reserve does not yet have infla­tion under con­trol were con­firmed over the past two days. Chair of the Fed­er­al Reserve Jerome Pow­ell sig­naled fur­ther pain could be in store as the fight against infla­tion saw inter­est rates under­go yet anoth­er hike of 75 bps (0.75%).

This announce­ment saw indices such as the S&P 500 take a nose dive, and Bit­coin faced heavy sell­ing pres­sure as well. Being a risk-on asset does not help the case of Bit­coin, and the nar­ra­tive of “infla­tion hedge” has long since died out.

The short-term tech­ni­cal out­look sug­gest­ed a move toward $17.8k could commence.

BTC- 4‑Hour Chart

Source: BTC/USDT on TradingView

On the 4‑hour chart, sig­nif­i­cant volatil­i­ty was seen in Sep­tem­ber, but the price was unable to form new highs. The climb past $20.8k was impres­sive but the fail­ure to fol­low through and break the $22.7k resis­tance meant the buy­ers had run out of steam.

The mar­ket quick­ly reversed and reg­is­tered new lows at $18.4k.

A lit­tle more than ten days ago the struc­ture flipped to bear­ish after BTC fell below the $21.2k mark. This struc­ture remained unbro­ken and sug­gest­ed fur­ther loss­es were likely.

The RSI on H4 was also below neu­tral 50. The neu­tral mark has act­ed as resis­tance mul­ti­ple times over the past week and hint­ed that, at the time of writ­ing, the momen­tum was still in favor of the sellers.

BTC- 1‑Hour Chart

Source: BTC/USDT on TradingView

The bear­ish bias on a high­er time­frame meant that the H1 bias for a trad­er can be bear­ish as well. This meant that we can look for oppor­tu­ni­ties to enter short posi­tions. A bear­ish order block was formed the pre­vi­ous day, high­light­ed by the red box.

A set of Fibonac­ci retrace­ment lev­els (yel­low) were also drawn, and the area between 61.8% and 78.6% retrace­ment lev­els could offer an entry to a short position.

The down­side tar­get would be the $17.8k sup­port, which lay close to the $17.7k lev­el (23.6% Fibonac­ci extension).

The OBV formed a low­er low over the past few days and called atten­tion to ris­ing sell­ing pres­sure. The RSI climbed above neu­tral 50 on the hourly chart but the bias can not be con­clud­ed to be bullish.

Conclusion

Inval­i­da­tion of the bear­ish notion pre­sent­ed would be a ses­sion close above the $20k mark for Bit­coin. On the oth­er hand, down­side tar­gets lie around the $17.8k mark. Fur­ther lows can not be dis­count­ed either in the weeks to come.