Technical Analysis of BTC/USD for January 17, 2024

EBA's New Guidelines and Their Influence on Bitcoin's Market Trajectory

In the ever-evolving world of cryptocurrencies, regulatory changes play a pivotal role in shaping market dynamics. The European Banking Authority's (EBA) recent expansion of anti-money laundering guidelines for crypto assets is a significant development. This analysis explores the impact of these new regulations on the BTC/USD pair, offering insights into potential market movements.

Key Takeaways:

The EBA's announcement on January 16 regarding enhanced guidelines marks a crucial step in the authority's efforts to mitigate financial crime risks associated with cryptocurrencies. These guidelines, effective from December 30, encompass a broad range of crypto-related activities and entities. They aim to harmonize practices across the European Union, potentially affecting how blockchain companies operate and interact with investor-hosted wallets and decentralized platforms.

While some Bitcoin enthusiasts view these regulations as restrictive, authorities see them as essential for combating financial crimes. The guidelines are expected to provide clarity in assessing risks specific to the crypto market, affecting companies that store or operate cryptocurrencies. This regulatory shift could have a notable impact on market sentiment and trading behavior.

Last year, the EU also prepared the Transfer of Funds Regulation (ToFR) regulating cryptocurrency transfers, as well as comprehensive and wide-ranging regulations on cryptocurrency markets - MiCA.

The MiCA regulations will come into force in December, but EU member states can optionally implement an 18-month transition period for CASPs, allowing them to operate without a licence.

The BTC/USD pair has made a new yearly high at the level of $49,126 and reversed sharply lower as the Pin Bar reversal candle was made at the weekly time frame chart. The next target for bulls is seen at the level of $50,000, however, with -15.50% drop last week, it might take a while for the bulls to go for it.

Support and Resistance

The intraday technical support is seen at the level of $41,643 and the intraday technical resistance is located at $43,249 and $44,385. The bull have been trying to break out above the resistance, but so far no avail.

Trendlines

There is an ascending trendline marked with blue arrows, indicating where the price has previously found support. If the price respects this trendline, it could bounce back up; if it breaks below, it could indicate a trend reversal. In a case of a breakout lower the next target for bears is seen at the level of $40,568.

Moving Averages

The chart features a 100-period Exponential Moving Average (EMA) and a 50-period Double Exponential Moving Average (DEMA). The current price is below both EMAs, which often suggests bearish sentiment in the market. The EMAs could act as dynamic resistance levels.

RSI

The RSI is at 43.13, which is neutral territory. It suggests that the market is neither overbought nor oversold, but it is closer to the oversold area, which could potentially provide a buying opportunity if other indicators align.

The Intraday H1 Indicator Insights

- 17 out of 21 technical indicators are showing Sell signal, 2 are showing Buy signal and 2 are Neutral

- 18 out of 18 moving averages are showing Sell signal

Sentiment Scoreboard

The general sentiment on the scoreboard is bullish (73% vs.27% bears). Last week sentiment remains bullish as well (70% bulls vs.30% bears) together with the last three days sentiment (66% bulls vs. 34% bears).

Monthly Pivot Points

Pivot Points are key price levels used in technical analysis to identify potential trend reversals, support, and resistance levels in financial markets.

WR3 - $60,342

WR2 - $52,233

WR1 - $47,421

Weekly Pivot - $44,125

WS1 - $39,312

WS2 - $36,015

WS3 - $27,908

Bullish Scenario

Reversal at Support: If the current price respects the ascending trendline and the near support level, buyers could see this as an opportunity to enter the market, potentially leading to a rebound in price.

RSI Bounce: Since the RSI is in neutral territory but leaning towards oversold, an upward movement from this level could indicate increasing buying momentum.

Break Above Moving Average: A decisive move above the EMA and DEMA with increased volume would signal a shift in momentum, potentially leading to a trend reversal to the upside.

Follow-Through from Pin Bar: If the market interprets the pin bar as a temporary pullback and the price moves above the high of the pin bar, it could validate the bullish reversal and attract more buyers.

In a bullish scenario, the price would need to break past the recent highs, with an increase in buying volume supporting the move. If the bullish momentum is strong enough, the price could aim for higher resistance levels, possibly targeting previous highs or new resistance levels formed by Fibonacci extensions or other technical indicators.

Bearish Scenario

Breakout Below Support: A break below the ascending trendline and the nearest support level could confirm bearish sentiment, potentially leading to further declines.

RSI Continues to Decline: If the RSI moves towards the oversold territory and continues to decline, it could reflect increasing selling pressure.

Lower Highs and Lower Lows: The formation of a lower high following the pin bar, accompanied by a new lower low, would suggest that the downtrend is continuing.

Resistance at Moving Averages: If the price struggles to break above the EMA and DEMA and these averages start to slope downwards, it could serve as dynamic resistance, making it difficult for the price to rise.

In a bearish scenario, the price could fall to test lower support levels, with the possibility of a sustained downtrend if the lower supports do not hold. Traders would be looking for signs of consolidation or a further breakdown in price to confirm the bearish outlook.

The begginers in forex trading need to be very careful when making decisions about entering the market. Before the release of important reports, it is best to stay out of the market to avoid being caught in sharp market fluctuations due to increased volatility. If you decide to trade during the news release, then always place stop orders to minimize losses.

Without placing stop orders, you can very quickly lose your entire deposit, especially if you do not use money management and trade large volumes. For successful trading, you need to have a clear trading plan and stay focues and disciplined. Spontaneous trading decision based on the current market situation is an inherently losing strategy for a scalper or daytrader.

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