This week, Bitcoin and Ethereum commenced with declines due to broader market sentiment and upcoming inflation reports (CPI and PPI) anticipated on January 14 and 15. Bitcoin’s price fell over 3%, while Ethereum’s dropped about 5%, with both cryptocurrencies showing bearish patterns and potential further losses ahead. Technical indicators reveal crucial support levels and possible opportunities for short-term rebounds despite prevailing bearish momentum.

The leading cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), have commenced the current week on a downward trajectory, consistent with broader declines observed across risk assets. As of January 13, Bitcoin’s price fell over 3%, reaching an intraday low of $91,245, while Ethereum dipped approximately 5%, trading as low as $3,105. This downward trend can be attributed to several factors influencing market sentiment, including upcoming crucial inflation data, namely the Consumer Price Index (CPI) and Producer Price Index (PPI), set to be released on January 14 and 15. The results of these reports are expected to significantly impact the market perception ahead of the Federal Reserve’s policy meeting scheduled for January 28-29. Recent data from the University of Michigan indicates that Americans’ long-term inflation expectations have increased from 3% to 3.3% annually over the next 5 to 10 years, while short-term expectations have also surged, compounding potential pressure on Bitcoin and Ethereum in the forthcoming days.

Moreover, Bitcoin is currently exhibiting a breakdown from a “bear pennant” formation evidenced on the 4-hour chart. This technical pattern, characterized by a series of lower highs and higher lows following a sharp drop earlier in the month, suggests an imminent continuation of bearish momentum, with a potential price target near $85,600, which aligns with a substantial support zone from late 2022. Additionally, several bearish indicators have been identified, including Bitcoin’s position below its 50- and 200-period exponential moving averages (EMAs), which serve as dynamic resistance levels. Notably, the formation of a “death cross,” where the 50-EMA falls below the 200-EMA, signals further downside potential.

On the other hand, Ethereum has mirrored Bitcoin’s negative trend, breaking below its bear pennant pattern’s lower trendline on the same day. This pattern’s measured move indicates a price target around $2,760, which is consistent with critical support levels from late 2022. Ethereum, similar to Bitcoin, remains below its 50- and 200-period EMAs, reinforcing the bearish outlook. Notably, Ethereum’s Relative Strength Index (RSI) has dropped below 24, entering deeply oversold conditions. Such extreme levels could indicate potential for a short-term relief rally if buyers defend vital support levels of $3,000 and $2,900. A successful defense of these supports may enable a rebound toward the $3,200-$3,300 range, where the pennant’s prior support line and the 50-EMA coincide.

In summary, Bitcoin and Ethereum presently exhibit bearish tendencies as they respond to upcoming inflation data and broader market conditions. The prevailing structures and technical indicators suggest further downside potential in the short term, alongside the possibility of temporary relief should critical support levels be maintained.

The cryptocurrency market currently faces significant pressure due to forthcoming inflation reports, which have historically influenced investor sentiment towards risk assets. As major players like Bitcoin and Ethereum operate under the watchful eye of economic indicators, the implications of inflation expectations become increasingly critical. Technical analysis reveals important patterns that could dictate the future price movements of these cryptocurrencies, making it essential for investors to stay informed and attentive to market trends. With the Federal Reserve’s monetary policy meeting approaching, understanding the backdrop of inflation indicators becomes vital as these reports may influence the interest rate trajectory in the United States. Both Bitcoin and Ethereum have previously exhibited sensitivity to economic developments, further solidifying the need for vigilance in monitoring their performance amidst these economic signals. Technical patterns such as bear pennants and associated RSI values also provide insight into the imminent risks and potential rebounds in these cryptocurrencies, underscoring the importance of both fundamental and technical analyses in navigating the current market environment.

In conclusion, Bitcoin and Ethereum have both experienced notable downward movements at the outset of the week, driven by a confluence of technical patterns and economic indicators. The anticipated CPI and PPI reports are likely to further influence market sentiment, potentially resulting in additional losses for these cryptocurrencies. Furthermore, the technical bearish structures, including the bear pennant formations and declining moving averages, suggest a continued focus on downside risks. However, oversold conditions may facilitate short-term rebounds, provided key support levels are defended. Investors should remain attentive to these developments to effectively navigate the evolving cryptocurrency landscape.

Original Source: www.fxempire.com

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