Supersize Fakeouts, Hold the "Fed Put"

Another Week, Another Fakeout

Federal Open Market Committee (FOMC) meetings are typically exciting for those who enjoy watching price action, and this week’s meeting was no exception. As mentioned in our note published on Tuesday evening, “Key Trends as Markets Seem Fed Up”, Bitcoin found itself about 5% off of last week’s range heading into Wednesday’s FOMC press conference.

Ahead of this week’s Fed meeting, we emphasized an important rule of thumb in trading: “previous resistance becomes support when broken, and vice versa. In this case, we have broken down through some key support, so we’d expect these levels to act as resistance as price revisits these areas.”

The first key level of resistance we identified was $38.5K. Bitcoin started to make a strong move towards this level ahead of yesterday’s FOMC meeting yesterday, but its rally proved to be short-lived. We saw extreme volatility on the intraday chart as price whipsawed traders with a $1.5K swing in the minutes immediately following the 2pm FOMC statement release (RIP to the high leverage traders). Price topped out as high as $38.9K for a very brief moment before falling back towards $37.4K as Fed Chair Powell kicked off the post-meeting press conference. During Powell’s speech, price all but retraced the entire move that was made in anticipation of his remarks. TLDR; price was unable to breach our first key level of resistance at $38.5K, aside from a fleeting moment (thanks to short liquidations on pre-FOMC momentum).

The second, heavier level of resistance for BTC is expected to occur around the $39.5K-$41K range due to previous structure lows and the 2022 Yearly VWAP. However, BTC never reached these levels as price continued to fall last afternoon, giving back all of yesterday’s gains (and then some).

In terms of support, $34K has been the clear level in the sand thus far and we’re looking f