Bitcoin rose by $18,000 in just a few days, but then entered a flat phase. This may be a pause before a new surge — Bitcoin often halts within strong trends and then can resume a powerful move even without a clear correction. Therefore, Bitcoin's current inability to continue growth does not mean the local upward momentum is over. Recall that neither Ether nor Bitcoin have yet broken the downtrends that began last year, so the current upward impulse should be considered local. Note also that a flat has formed on the 4-hour TF, and on the daily TF there is a high probability of a flat between $60,000 and $82,500. Additionally, on the daily TF, Bitcoin may take liquidity from the May 6 high and work the nearest bearish FVG without breaking the downward structure. In our view, the technical picture remains firmly bearish.

This week the US will publish the August inflation report, the last major release before the Federal Reserve meeting. Bitcoin's dynamics and investor appeal still depend on Fed monetary policy — a looser policy is generally better for risk assets. Currently, talk of cutting the key rate is absent; at the same time, the market has been anticipating tightening for three months, which is not favorable for Bitcoin. We assess the likelihood of a Fed hike as low. We believe the US labor market is not in great shape and the US economy has been slowing for several quarters. Last week, Christopher Waller and John Williams said they see no reason to tighten policy. Thus we view the odds of a September Fed hike as low.

Inflation data can increase or decrease those odds. If CPI on Friday prints above expectations, it would raise the probability of hawkish actions later this year; if not, it won't. The Middle East conflict persists, so we do not expect US inflation to naturally return to 2% soon. The European Central Bank may raise rates again this week in its fight against inflation.

General BTC/USD structure on 1D

On the daily timeframe, Bitcoin continues forming a downtrend. The trend structure is bearish, and the CHOCH line sits at $82,800, where the last Lower High (LH) formed. Only above this level can the downtrend be considered complete. The last and only bearish FVG was pierced, turning into a bullish IFVG; thus, that area may serve as a POI for longs in the future. Bitcoin has not yet broken the downtrend, but over the past three weeks the odds of the bearish trend ending have increased. There is a high probability of a flat between $60,000 and $82,500, which means price could take liquidity from the last LH and then start a new decline.

General BTC/USD structure on 4H

On the 4-hour timeframe, Bitcoin is in a clear flat and has twice taken liquidity to the sell side, forming two deviations of the channel's upper boundary. Traders therefore received at least two sell signals, allowing for the expectation of a decline with targets at 50% and 100% of the sideways channel width. After two deviations of the upper boundary, we would say the probability of a new strong drop is higher than a breakout of the flat to the upside. However, the latest leg up was an obvious pump, so traders must not forget to use a stop-loss.

Trading recommendations for BTC/USD

Bitcoin continues to form a downtrend despite last week's strong rally. We continue to expect a decline with a target of $57,500 (the 61.8% Fibonacci retracement of the three-year uptrend), although this level has effectively already been tested. We do not consider the downtrend finished. The current rise in the top crypto looks little like a corrective move and therefore is not a strong argument for opening longs. The move resembles a pump. Liquidity could be taken from the $82,850 high, potentially triggering a new leg of the downtrend. On the 4-hour TF, another fall may follow the second liquidity grab at recent highs (deviation).

Explanations of the Illustrations:

• CHOCH — Change of Character (break in trend structure).
• Liquidity — liquidity, stop losses, pending orders that market makers use to accumulate positions.
• FVG — Fair Value Gap, an area of price inefficiency; price moves quickly through such areas, indicating one side was absent; later price often returns and reacts to these areas in the continuation of the main trend.
• IFVG — Inverted Fair Value Gap. After returning to such an area, price may not react and instead impulsively break and then test it from the other side.
• OB — Order Block. A candle where a market maker opened a position to collect liquidity and form their position in the opposite direction.