­­Bitcoin Price Rally: Are We on the Brink of a $42,000 Breakout?

­­Over the weekend, BTC, the powerhouse behind the world’s most valuable cryptocurrency network, demonstrated an impressive performance, almost breaching the $27,000 resistance level. Although the market sentiment remained bullish, the inability to alleviate seller congestion resulted in a brief retracement to $26,278. Presently, Bitcoin is trading at $26,408, attracting both investors and traders seeking fresh opportunities following last week’s dip to $24,775.

The recent decision by the United States Federal Reserve to pause interest rate hikes led investors to reconsider potential opportunities. The unexpected drop in Bitcoin price ensued as Chair Jerome Powell’s remarks overshadowed the anticipated outcome. Powell hinted at a resumption of rate hikes as the regulator aims to push inflation to 2%. Despite the initial disappointment, investors are now reevaluating the short-term prospects that could arise from leaving “interest rates unchanged.”

With the Federal Reserve opting to keep interest rates steady, the environment appears conducive for a crypto asset rally. However, the market struggled as the Fed emphasized that rate cuts were not imminent in the near future. Bitcoin, along with other leading altcoins, faced challenges last week due to mounting regulatory scrutiny in the US. Nevertheless, Bitcoin will take center stage going forward, especially as its dominance continues to rise.

Presently, all eyes are focused on Bitcoin, particularly due to the selling pressure on altcoins and its growing dominance. As long as the market leader maintains the range between $20,000 and $22,000, bullish sentiments should not be overly alarmed.

BTC Soars Near $27,000

Bitcoin’s price initiated the week with a 0.5% decline during the Asian session. The retracement over the weekend found support at the 100-day Exponential Moving Average (EMA) ($26,278), which will play a crucial role throughout the day and potentially determine whether BTC price will further drop or close the gap towards $27,000.

BTC-cup

Bulls are currently encountering stubborn resistance slightly above the current market value of BTC. To neutralize an incoming sell signal, a breakthrough and sustained position above this short-term hurdle are necessary.

Upon careful examination of the Moving Average Convergence Divergence (MACD) indicator, a sell signal seems to be forming. Typically, overhead pressure intensifies when the MACD line (in blue) dips below the signal line (in red).

Should the bulls successfully execute a V-shaped recovery, Bitcoin’s price may achieve two significant milestones: overcoming the resistance at $27,000 and subsequently closing the gap towards $28,000.

A related forecast suggests that Bitcoin’s price is gearing up for a substantial breakout to $42,000. The analysis is based on a cup and handle pattern observed on the weekly chart. Currently, the bulls hold the upper hand and are poised to control the narrative. However, traders must remain vigilant for potential reversals, particularly if the support at the 100-day EMA weakens, potentially leading to further losses below $25,000. Conversely, an opposite reaction can be expected if the resistance at $27,000 gives way to the ultimate breakout towards $42,000.

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