Bitcoin trades at a major support ahead of the US CPI report. What to watch next?

FUNDAMENTAL OVERVIEW   Bitcoin dropped all the way back to the key $76,000 support level, as first the strong US NFP report and later the surge in oil prices increased Fed rate hike expectations. This week has been all about the tensions in the Middle East. The escalation in attacks between US and Iran, and Yemen’s Houthis attacks on Saudi energy facilities, provided a tailwind for oil prices to push into new highs. The momentum then increased as traders started to price in a prolonged conflict after Trump said that he expects the war with Iran to end immediately after the US midterm elections in November, effectively acknowledging that the war is likely to continue through at least the election period. Yesterday, WTI crude oil broke through the psychologically important $100 level and triggered a hawkish repricing in interest rate expectations across the board. Today, the focus will be on the Core CPI M/M measure, as that's what the Fed members have been focusing on. Fed's Waller recently said that he would consider a rate hike in September if the monthly core reading surprised to the upside. Unfortunately, that was before the latest surge in oil prices. Traders are now pricing in a 67% chance of a rate hike at the upcoming meeting. I feel like an in-line CPI won't be enough to steer the market away from expecting a rate hike. If we go into the FOMC meeting with higher probabilities for a rate hike, then the Fed will be forced to hike just to avoid delivering a dovish surprise. In light of this, I think only a soft Core CPI could give Bitcoin a boost in the short-term, while an upside surprise might exacerbate the risk-off sentiment and trigger a selloff, as the market could start pricing an even more aggressive path for rate hikes.   BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME On the daily chart, we can see that Bitcoin rejected the 82,500 resistance and pulled all the way back to the key 76,000 support. We can expect the buyers to step in around the support with a defined risk below it to position for a rally back into the resistance. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 67,000 support next. BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME On the 4 hour chart, we have a downward trendline defining the recent bearish momentum. If the price pulls back into the trendline, we can expect the sellers to lean on the trendline with a defined risk above it to target a break below the support. The buyers, on the other hand, will want to see the price breaking higher to increase the bullish bets into the resistance. BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME On the 1 hour chart, we have a minor resistance zone around the 77,600 level. This is where we can expect the sellers to step in with a defined risk above the resistance to keep pushing into new lows. The buyers, on the other hand, will look for a break higher to extend the pullback into the trendline. UPCOMING CATALYSTS Todayall eyes will be on the US CPI report. This article was written by Giuseppe Dellamotta at investinglive.com.