BTC Bears in the Driving Seat ahead of US Flash Private Sector PMIs

Key Insights:

• On Thursday, BTC joined the broader crypto market in the red, falling by 1.98% to end the day at $28,248.
• Recession fears gripped the global financial markets, sending BTC to a session low of $28,012.
• The technical indicators are bearish, signaling a return to sub-$28,000.

On Thursday, bitcoin (BTC) fell by 1.98%. Following a 5.18% slide on Wednesday, BTC ended the day at $28,248. Significantly, BTC fell short of the $30,000 handle for the first time since April 10.

A mixed start to the day saw BTC rise to a mid-morning high of $29,098 before hitting reverse. Falling short of the First Major Resistance Level (R1) at $29,959, BTC fell to an early evening low of $28,012. BTC fell through the First Major Support Level (S1) at $28,129 before a partial recovery to end the session at $28,248.

US Recession Fears Send BTC and the NASDAQ Composite South

Following the euro area and UK inflation-fueled sell-off on Wednesday, US economic indicators sent riskier assets into the red on Thursday.

The Philly Fed Manufacturing Index fell from -23.2 to -31.3 versus a forecasted -19.2. US jobless claims were also bearish, with initial jobless claims up from 240k to 245k.

Significantly, the continued rise in jobless claims suggested that the Fed interest rate hikes are taking effect. With falling consumer spending and the manufacturing sector struggling, recession fears weighed on investor sentiment.

The US equity markets responded to the early recession signals, with the NASDAQ Composite Index falling by 0.80%.

The Day Ahead

US economic indicators will influence the afternoon, with Flash private sector PMIs in focus.

While a larger-than-expected fall in the service sector PMI will impact market risk sentiment, sub-components of both surveys need consideration. Softer price pressures, weaker labor market conditions, and a fall in new orders will test buyer appetite.

However, SEC v Ripple case-related chatter and Binance and Coinbase (COIN)-related news will draw interest. Following the Securities and Exchange Commission Oversight hearing, US lawmaker commentary and SEC and CFTC activity would move the dial.

Bitcoin (BTC) Price Action

This morning, BTC was up 0.15% to $28,289. A mixed start to the day saw BTC rise to an early high of $28,316 before easing back.

Technical Indicators

Resistance & Support Levels

BTC needs to move through the $28,453 pivot to target the First Major Resistance Level (R1) at $28,893 and the Thursday high of $29,098. A return to $28,500 would signal an extended bullish session. The crypto news wires should be crypto-friendly and US economic indicators to support an extended rally.

In the event of an extended rally, BTC would likely test the Second Major Resistance Level (R2) at $29,539. The Third Major Resistance Level (R3) sits at $30,625.

Failure to move through the pivot would leave the First Major Support Level (S1) at $27,807 in play. However, barring another data-fueled sell-off, BTC should avoid sub-$27,500 and the Second Major Support Level (S2) at $27,367. The Third Major Support Level (S3) sits at $26,281.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was bearish signals. BTC sat below the 100-day EMA ($29,168). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, sending bearish signals.

A move through R1 ($28,893) would give the bulls a run at the 100-day EMA ($29,168) and 50-day EMA ($29,435). A breakout from the 50-day EMA would bring R2 ($29,539) into play. However, a BTC decline through 200-day EMA ($28,192) would support a fall through S1 ($27,807) to test buyers at $27,500. A move through the 50-day EMA would send a bullish signal.