Bitcoin’s price closed last week at $115,390, momentarily breaching the $115,500 resistance level as the weekend approached, only to retract slightly and finish the week just below it. The previous week saw a robust green candle, indicating sustained upward momentum. A key driver behind this bullish sentiment was the U.S. Producer Price Index, which came in significantly below forecasts last Wednesday, sparking optimism among investors regarding a potential rate cut by the Federal Reserve.
However, inflation data released the following day registered at 2.9%, which, while in line with expectations, was higher than the previous month’s figure of 2.7%. As the Federal Reserve prepares for its FOMC Meeting this Wednesday, it faces the challenge of weighing the benefits and risks of a rate cut. The market is largely anticipating a 0.25% reduction in interest rates, as reflected in Polymarket predictions. A hesitation from the Fed could trigger a market correction.
As the week unfolds, the $115,500 level remains a critical resistance point for Bitcoin, with $118,000 looming above it. If Bitcoin achieves another strong performance, it may briefly surpass the $118,000 mark intraweek before potentially closing below that level by week’s end. Should Bitcoin encounter selling pressure in this area, it could lead to a retreat. Conversely, if the price displays weakness or encounters rejection around $118, short-term support will likely be tested at $113,800. Should Bitcoin fall below that point, the weekly support level at $111,000 would stand in the way; a dip below this level could challenge the recent low of $107,000.
Examining the daily chart, there is a slight bearish bias following a rejection at $116,700 last Friday. However, this sentiment could shift back to bullish if the U.S. stock market resumes a positive trend on Monday. The MACD is attempting to remain above the zero line to re-establish bullish momentum, while the RSI, despite dipping, maintains a bullish posture and will look to the 13 SMA for reinforcement if selling intensifies on Tuesday. All eyes will be on Chairman Powell and the Federal Reserve’s announcement on Wednesday at 2:30 PM Eastern, as any outcome that deviates from the anticipated 0.25% rate cut could induce significant volatility, impacting Bitcoin’s price.
The overall market sentiment remains bullish after experiencing two consecutive green weekly candles, and traders are eager to test the $118,000 level this week. For the coming weeks, it will be crucial for Bitcoin to maintain momentum above $118,000, as successfully establishing this level as support could pave the way toward the $130,000 range. If the Fed delivers a rate cut this week, attention will turn to potential further cuts in October, with favorable market data playing a critical role in Bitcoin’s trajectory.
Conversely, any significant negative developments or an unexpected decision from the Federal Reserve not to cut rates could result in Bitcoin testing its support levels.
