Bitcoin’s Technical Analysis Overview
Bitcoin experienced a positive week driven by dovish comments from Federal Reserve members and an executive order by Trump permitting cryptocurrencies in retirement plans. Fed’s Williams initially indicated the possibility of a rate cut in September, with further support from Fed’s Daly and Kashkari, based on employment data. The news of Trump’s executive order led to a rally in Bitcoin and other cryptocurrencies.
Attention is now on the forthcoming US CPI report, which could influence rate cut expectations. A lower-than-expected CPI might strengthen the likelihood of a September rate cut, potentially signalled by Fed Chair Powell at the Jackson Hole Symposium. Conversely, higher figures could result in a hawkish market reaction, possibly affecting risk assets.
In technical analysis, the daily chart reveals Bitcoin rebounded from a key trendline around the 112,000 level, with further gains approaching a downward trendline. Sellers may initiate positions above this trendline, whereas buyers aim for a breakout. The 4-hour chart indicates resistance near the 116,000 zone, attracting buyers seeking an upward trendline break, and sellers anticipating a downward movement. On the 1-hour chart, a minor upward trendline illustrates bullish momentum, with buyers and sellers respectively strategising around this trend.
Potential Impact of US CPI Report
Based on the dovish shift from the Federal Reserve and new potential demand from retirement funds, we should be prepared for a significant move. The market is now pricing in an over 80% chance of a 25 basis point cut in September, according to CME FedWatch data. With over $10 trillion in assets held in US 401(k) plans as of early 2025, even a small allocation to crypto could create sustained buying pressure.
All eyes are now on next week’s US CPI report, which will be the deciding factor for the Fed’s September decision. We remember how sticky inflation was through 2023 and 2024, so an unexpected high reading could quickly erase the recent optimism. A lower-than-expected number, however, would likely be confirmed by Chair Powell at Jackson Hole, sending risk assets higher.
Bitcoin has bounced from the major $112,000 trendline and is now pushing against key downward resistance. This presents a clear decision point for derivative traders; a rejection here favors buying short-term puts, while a decisive breakout could trigger a rally towards a new all-time high. A move above this trendline would invalidate the bearish setup for now.
Strategies for Buying and Selling Bitcoin
For those looking to go long, the $116,000 zone offers a potential entry point on any pullback from the current resistance. A break below this support, however, would signal weakness and strengthen the case for a move back towards the $112,000 major trendline. This is the key short-term level to defend for buyers.
Given the binary nature of the upcoming CPI report, we are seeing a rise in implied volatility in the options market. Traders might consider buying straddles or strangles to play the expected price swing, profiting from a large move in either direction. This strategy is ideal when a big move is expected but the direction is uncertain.
In the immediate term, we are watching the minor upward trendline on the hourly chart for signs of momentum. A break of this line could be an early warning that the overhead resistance is holding. This would offer an opportunity for sellers to act before a larger pullback.
