Bitcoin Analysis: Attempted Wedge Breakout on Elevated Volume

On 28 August, Fed Chair Kevin Warsh delivered a more hawkish assessment of inflation at the Jackson Hole symposium than he had following the July meeting. He reaffirmed the Federal Reserve's 2% target for core PCE inflation and described tackling price pressures as the central priority for policymakers.

Following his remarks, expectations for a rate hike at the September meeting increased noticeably, with the market apparently pricing in a higher probability of such a scenario. Against this backdrop, Bitcoin pulled back, giving up part of its August gains.

Technical Analysis of Bitcoin

The four-hour BTC/USD chart shows a pronounced uptrend, with the move from 14 to 28 August taking the price from around $63,000 to a peak near the current red resistance at $81,500.

An ascending wedge formed near the top of this advance, and on 28 August the price broke below its lower boundary on elevated volume. However, the decline has yet to develop into a sustained move. Momentum has slowed, and Bitcoin is currently trading within the density of the market profile, between the Point of Control (POC) at $78,900 and the lower profile boundary at $78,100.

If the decline resumes and the price establishes itself below the lower profile boundary, the round-number level at $77,000 could provide the next area of support.

Conversely, if sellers fail to push the price lower and the wedge breakout proves to be false, Bitcoin would first need to overcome the market-profile density on the way up. A break above the upper profile boundary at $80,000 would reopen the path towards the trend high around $81,500.

The RSI + MAs indicator currently shows readings of 50, 48 and 55, with all three measures remaining within the neutral zone.

Key Takeaways

The wedge breakout has yet to generate confirmation of a sustained decline, while the market remains within the current profile range. Neutral RSI + MAs readings offer no clear advantage to either buyers or sellers.

A more decisive move in Bitcoin could emerge as market expectations surrounding the Federal Reserve's September decision continue to evolve.