BTCUSD has been unable to make much headway recently, as USD traders are edgy ahead of the FOMC statement. Price has slowly climbed higher in the past few days but is still encountering strong resistance at the $415 area or the 61.8% Fibonacci retracement level based on the swing and low on the 1-hour chart.
If this area continues to keep gains in check, BTCUSD could resume its drop to the previous lows at $405, completing a head and shoulders formation. Additional bearish momentum could lead to a break below this neckline, confirming that a longer-term downtrend might take place.
The chart pattern is around $20 tall so the resulting downtrend could last by the same amount, taking BTCUSD down to the area of interest at $380 or lower. On the other hand, a break above the resistance could put bitcoin on track towards the swing high at $420 then onto $450.
Additional volatility is to be expected during the FOMC statement and the scheduled press conference with Janet Yellen. Her remarks are likely to be scrutinized for more clues on when the Fed might hike interest rates this year, along with the updated growth and inflation forecasts from the committee.
Policymakers will also update their dot plot of interest rate expectations, and confirmation that more rate hikes are still in place for the year could keep the dollar strongly supported. In addition, the idea of additional tightening could weigh on risk trades, including BTCUSD price.
On the other hand, a switch to a more cautious bias could lead to expectations of low borrowing costs for businesses and consumers, which might be positive for risk and bitcoin price. A long green candle closing above $415 or the 61.8% Fib could be enough to confirm an upside breakout, although false breaks and quick reversals might also be possible given the volatile nature of the FOMC event.
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