Bitcoin, Ethereum Spike Higher Into Inflation Data Before Stalling: Here's What To Watch - Bitcoin (BTC/USD)

Bitcoin BTC/USD spiked up 2.43% at one point during Thursday’s 24-hour trading session, leading Ethereum ETH/USD about 2.13% higher, prior to the U.S. Labor Department printing CPI data for the month of December.

Although the data showed inflation ticked lower for the month ending 2022, with the consumer price index rising 6.5% in December, down from 7.1% in November, the jobs market remains tight.

Initial claims for the week ending Jan. 7 came in at 205,000, down 1,000 from the week prior but below the 215,000 jobless claims economists estimated.

Traders and investors are hoping the Federal Reserve will continue to ease on hiking rates this year after the December 0.5% hike showed a softening in the central bank’s policy stance.

Although the market wanted to see higher jobless claims to support the CPI data, the strong economy could indicate the Fed is lowering inflation without throwing the U.S. into a recession.

From a technical standpoint, the S&P 500 and Ethereum bumped up into their respective 200-day simple moving averages (SMAs), which could be why the general market and the crypto sector stalled on a bullish move.

The 200-day SMA is a bellwether indicator that suggests whether an index or security is in a bull or bear market, and securities are unlikely to break through the level on the first try.

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The Bitcoin Chart: Unlike Ethereum, Bitcoin hasn’t reached the 200-day SMA, trading about 7.8% under the level. While the 200-day SMA isn’t acting as resistance for Bitcoin, the crypto’s relative strength index (RSI) is trending in oversold territory, which is likely creating resistance.

Bitcoin also rejected its high-of-day near the $18,385 level, which became a resistance level most recently on Dec. 14. If Bitcoin closes the trading day under that level, the crypto will print a shooting star candlestick, which could indicate lower prices will come on Friday.

Bullish traders would like to see lower prices, or sideways consolidation on Bitcoin, to allow its RSI to cool down. Bears want to see big bearish volume come in and drop Bitcoin down the eight-day exponential moving average, which could cause the stock to negate its current uptrend.

Bitcoin has resistance above at $19,915 and $20.545 and support below at $17,580 and $16.797.

The Ethereum Chart: Ethereum briefly popped up above the 200-day SMA on Thursday before falling back under the level. The crypto may need to trade under that area for a period of time, at least on smaller time frames, before gaining the power to close the 24-hour session above the level.

Ethereum’s RSI is also trending in oversold territory at about 74%. When a stock or crypto’s RSI reaches or exceeds 70%, it can be a sell signal for technical traders.

If Ethereum closes the trading session near to its opening price, the crypto will print a doji candlestick, which could indicate lower prices are in the cards for Friday. If Ethereum can close near its high-of-day, the crypto will close with a bullish hammer above the 200-day, which could signal higher prices are on the horizon.