Daily Report – Bitcoin and Market Update (December 14 2022)

HTF 1D

The daily chart has shown that BTCUSD has invalidated the bearish pennant concept, following a sharp upward reaction to the lower-than-expected CPI prints. As a result, the bottom formation seems to have been completed.

The daily close above the $17500 resistance level has validated the concept of a failed breakdown at the bottom.

Depending on today’s FOMC rate hike decision, the bottom formation may be reinforced, and direct the BTCUSD price trends toward the 21000 USD territory (MA200).

MTF 12H:

Besides, the middaily BTCUSD chart has recorded a breakout to the upside, over the main resistance of $17500 on the CPI news release.

For that, the trend indication alerted an upward twist and a breakout signal, reinforcing the short-term bulls to continue higher. As long as BTC continues to close above $17403, the bulls will maintain the control over the market.

However, the FOMC press release tonight is another instance of an event trading day.

Typically, on news days, the prices rise in anticipation toward the news announcement, followed by a sharp decline from the “sell-the-news” type of traders, who rely on this rule of thumb.

FOMC SPECULATION

Overall, the traders are pricing in the 50-75 bps rate hike at 81.8% likelihood, accounting for the positive CPI prints and the prior negative PPI print surprise.

If most of the traders get surprised positively (FOMC rate hike is lower than expected), then the immediate price reaction should be to the upside. Otherwise, a negative surprise will lead to a negative price shock, and, perhaps, an ugly invalidation to the freshly-born bullish BTC reversal pattern at the bottom. Because failed patterns perform better in the opposite direction than initially anticipated, a negative surprise could trigger a rapid sell-off in the BTC market. Caution advised.

The price volatility increases with the disparity between the anticipated figures and the ones received in reality. The greater the surprise, the greater the price shock and the volatility burst.

Volatility is a measure of risk in the financial world. Hence, it’s recommended to account for elevated risk conditions around the news release today.

BTC has one more reason to ascend tonight next to a historically bullish seasonality pattern for December (and miners getting above breakeven), but the dominant tendency is bearish (bearish primary market trend). It’s a big fight and decision time for BTC.

Prepare your stops, avoid excessive trading, and be prepared for the worst – while hoping for the best.

Hope it helps. God bless.