Bitcoin Price Forms H&S Pattern Ahead of US CPI Data

Bitcoin price drifted higher and approached the important resistance level at $18,000 ahead of the upcoming American inflation data. BTC was trading at $17,400, the highest point since December 16. It has surged by more than 6.50% from the lowest point in December.

US inflation data ahead

The main catalyst for Bitcoin and stocks this week will be the upcoming American inflation numbers scheduled for Thursday. Inflation is an important data that tends to move most financial assets like currencies, cryptocurrencies, stocks and bonds.

This happens because inflation is part of Fed’s dual mandate. According to the law, the Fed exists to ensure that inflation is stable and the unemployment rate is low. Data published last week showed that the Fed has achieved the latter since the unemployment rate stands at 3.5%, close to the lowest level on record.

Inflation, on the other hand, has started falling. Data published in December showed that the headline consumer inflation dropped for the second straight month. With gas and oil prices falling, analysts believe that inflation dropped to 6.5% in December. Core inflation, on the othe hand, is expected to drop to about 5.5%.

If analysts are correct, it means that the Fed will be under pressure to maintain its hawkish tone. In 2022, the bank decided to hike rates by 450 basis points, which explains why BTC price plunged by more than 75% in 2022. 

Therefore, a lower inflation figure will mean that the ban will start pivoting soon. Signs of a pivot will push Bitcoin much lower in the coming days.

Bitcoin price prediction

The four-hour chart shows that BTC price has been in a slow upward trend in the past few days. As it rose, the coin moved to the important resistance level at $17,422. This was a notable level because it was the highest level on December 5. 

It is also along the right shoulder of the head and shoulders pattern. Therefore, I suspect that the BTC price will have a strong bearish breakout in the coming days. If this happens, the next key level to watch will be at $16,460.