Technical Analysis

BTC/USD Analysis – December 16, 2021

By LonghornFX Technical Analysis
Dec 16, 20213 min

Bitcoin Price Prediction

The BTC/USD was closed at $48,901.0 after placing a high of $49,520.0 and a low of $46,602.0. BTC/USD extended its gains and rose for a second consecutive session on Wednesday mainly because of the weakness of the US dollar. The US dollar, which has a negative correlation with the leading cryptocurrency BTC, dropped on Wednesday after the stock markets rallied higher amid the latest announcement from Federal Reserve. The US central bank said that it was increasing its reducing bond purchases from January.

After the monetary policy meeting, Fed chair Jerome Powell said that Fed would speed up stimulus withdrawal by $30 billion every month to wind down early next year, doubled from the current pace of withdrawal of $15 billion every month. Federal Reserve acknowledged the threat of inflation reaching a 39-year high level and said that the quicker winding down of the asset purchases could allow it to proceed more quickly to start raising interest rates for the first time since 2018.

Fed cut interest rates closer to zero after the spread of the coronavirus in March 2020 began to hit global markets and economies, and it has held them there since then. The rising inflation and increased consumer prices have raised concerns in the market. Many digital-asset traders were closely watching the Fed announcement on Wednesday as they believe the cryptocurrency is a better hedge against the potential debasement of the US dollar that might result from the monetary stimulus.

Apart from this, the US dollar was under pressure on Wednesday despite the favourable Fed decision. The DXY dropped and reached 96.51 level after the Wall Street indexes moved higher. The rising stock prices in the US added further negative pressure on the US dollar and dragged its prices to the downside. The greenback's weakness then supported the leading cryptocurrency and pushed it higher on board.

Furthermore, Tesla CEO Elon Musk believed that Bitcoin was not a good currency for everyday payments against the meme-based cryptocurrency DOGE. According to Musk, BTC was not a good substitute for transactional currency; instead, it was an excellent store of value. He said that Dogecoin was better suited for transactions that were actually created as a joke. The transaction value of Dogecoin was more than bitcoin as people tend to use BTC for holding rather than making payments because the cost per transaction was very high. These negative comments from Musk caped further gains in BTC/USD on Wednesday.

BTC/USD Intraday Technical Levels

Support Resistance

47162.0 50080.0

45423.0 51259.0

44244.0 52998.0

Pivot Point: 48341.0

BTC/USD - Technical Outlook

Bitcoin has begun a recovery wave above the $47,500 resistance level with BTC bull's increased momentum to break through the $48,000 barrier level. The price broke the Fib retracement level of the latest slide from the $48,762 swing high to the $46,666 low. Furthermore, on the hourly chart of the BTC/USD pair, there was a break above a connecting negative trend line with resistance near $48,200.

Bitcoin is currently trading above the $48,500 mark and the 100 hourly simple moving average. It is approaching the $49,250 resistance level. The 1.236 Fib extension level of the recent slide from the $48,762 swing high to the $46,666 low appears to be functioning as resistance.

Near the $48,000 mark, the first substantial support is formed. The primary support is presently close to $47,500. A breach below the $47,500 support level may signal the commencement of a new drop in the near future. The scenario above might fall into the $45,000 support zone.


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