Traders are awaiting potential signals regarding interest rates from Powell's speech in Jackson Hole.

Demand for ETFs, futures activity, and investor sentiment impact Bitcoin price movements.

Key technical levels: Bitcoin support at $111,500 and resistance approaching $125,000.

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Today, all eyes, including those of cryptocurrency traders, are on the speech by the Chairman of the U.S. Federal Reserve in Jackson Hole.

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Over the past week, Bitcoin's price fell by about 10% to $112,000, due to weak economic data and reduced odds of a rate cut amid rising inflation. Currently, investors expect a 75% chance of a rate cut in September, but uncertainty still prevails in the markets.

Powell is expected to adopt a data-driven neutral approach in his speech, but any negative signal regarding rate cuts could push high-risk assets like Bitcoin and Ethereum into a strong selling wave.

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Overview of the recent market correction

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Bitcoin faced strong selling pressure due to profit-taking at the $124,000 level, in addition to the liquidation of leveraged positions exceeding $1 billion. The slowdown in demand for spot ETFs, along with the uncertainties raised by the July Fed meeting minutes, contributed to this pressure. Over the past five days, outflows from exchange-traded funds reached $1.17 billion, marking the longest wave of declines since April.

Despite these pressures, there are signs that the decline may be limited. The number of open contracts in cryptocurrency futures markets is still increasing, reflecting investors' commitment to their positions. Additionally, large investors continued to buy Bitcoin over the past week while individual investors were selling, which is a positive signal similar to what occurred during previous recovery periods.

The fear and risk appetite index in the cryptocurrency market remains at a neutral level, indicating a balance in market sentiment. The continued preference for call options in the options market also shows that long-term investor expectations remain positive.

Considering these diverging trends, the key factor in Bitcoin's price movement remains developments related to the interest rate decision on September 17. The first influential points are the statements from Jackson Hole that everyone is closely watching.

Federal Reserve Chairman Jerome Powell is likely to maintain a neutral tone without surprising regarding interest rates. Therefore, the economic data released until the decision date will remain the main determinant for market pricing.

In this context, identifying short-term technical support and resistance levels on the Bitcoin chart is of utmost importance for investors and traders.

Technical outlook for Bitcoin

Bitcoin price chart

At the beginning of the week, Bitcoin faced a strong wave of selling that dropped its price below $117,300, a medium-term support level, reinforcing the downward trend. After breaking this support, the lower boundary of the ascending channel became a critical level before the price also fell below it at around $115,600.

Looking at the downward trend over the past week, the price stabilized around mid-week near the $112,500 level, where technical indicators showed that Bitcoin entered the short-term oversold territory. This slowdown reflects a state of anticipation in the markets awaiting Powell's statements.

Currently, the price is hovering near the three-month Exponential Moving Average (EMA), which serves as an important dynamic support. It is noteworthy that the same scenario repeated last June, when Bitcoin bounced off this average and regained its path within the ascending channel.

If Powell provides signals that encourage risk-taking, or even adopts a neutral tone instead of a hawkish stance, we may see a return of buying. The price could initially rise to the $114,600 area, with the potential to later approach the $120,000 – $125,000 range, supporting the restoration of bullish momentum.

If the market faces additional selling pressure and the price falls below the daily EMA at $111,500, it may retreat towards the $106,000 level.

Based on the daily chart for Bitcoin, the current support and resistance levels can be summarized as follows:

Support levels: $112,500 – $111,500 – $106,000

Resistance levels: $114,650 – $117,300 – $119,000 – $125,000