Bitcoin (BTC) Soars After Benign Inflation Data: What’s Next with Thursday’s Release?

An unexpected 0.1% fall in the August Producer Price Index (PPI) enabled Bitcoin (BTC) to push through resistance and maintain above $114,000 early on Thursday. The Consumer Price Index (CPI) figures are due out today. Forecasts here are for a slight rise. How could Bitcoin be affected?

Market focus moves to CPI release later today

Tuesday’s PPI reading for August of -0.1% was a real shot in the arm for the US economy. Analysts had been expecting +0.3, so this was a real positive, showing that tariffs had still not had their impact felt.

On Thursday, there will be more focus on the Consumer Price Index (CPI) release. The consensus here is also for a +0.3% rise in August. With the Federal Reserve potentially about to raise interest rates next week it will be important that this figure does not come in any hotter than expected.

If markets do suffer as a result of a negative inflation print, Bitcoin is likely to also take a hit. However, with rate cuts on the horizon, this may only be a temporary dip.

$113,500 becomes new horizontal support

Source: TradingView

In the short-term chart the $BTC price is still heading up, following the ascending channel. With $113,500 flipped into support again, the current upward impulse could continue to the next resistance at $115,700. This coincides nicely with the 0.5 Fibonacci level. The top of the channel would also act as resistance just above this.

Looking ahead, for this upside move to advance beyond what has just been mentioned, the big resistance at $117,500 will need to be surpassed. This really is key, and the only other resistance of note before getting back to the all-time high is at $120,000.

Breakout of ascending triangle

Source: TradingView

The daily time frame displays an ascending triangle that the $BTC price broke out of on Wednesday, and looks to be confirming on Thursday. Given that the breakout line is also good horizontal support it might be expected that the price continues to rise from here. The measured move could take the price to just shy of the $120,000 horizontal resistance.

At the bottom of the chart, the RSI reveals that its indicator line is gradually moving up. If the indicator line is able to pass up through the downtrend line, this would likely correspond to a breakout in the price action above, possibly at either the $117,500 or the $120,000 horizontal resistances.

Have the last few weeks of price action formed a bull flag?

Source: TradingView

Zooming out into the weekly time frame the last few weeks of price action have been drawn within a bull flag. Given the quite erratic price action over the weeks of this potential flag, it has never been obvious that it was a flag. It is still up for debate, but on the weekly time frame it could be argued that the price action does possibly fit this description.

If true, either this week or next, there may well be a breakout. The pole of the flag would be taken from the bottom of the previous smaller bull flag, and this would provide a measured move of around $130,000. 

At the bottom of the chart is the Stochastic RSI, which is posturing a cross-up of its indicators. If the indicators confirm as crossing up above the 20.00 level at the end of this week, this would likely signal the big upside price momentum needed to push the $BTC price up and past the $124,000 all-time high, and potentially on to that $130,000 target.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.