Volatility Compression and CPI: Trader Assesses Bitcoin and Ethereum Movement Scenarios

• Bitcoin is technically closing the backup scenario, but the quality of price action remains weak.
• The BVOL index indicates an approaching strong impulse.
• Ethereum is squeezed under $1950 and retains the risk of manipulation around $2000.
• CPI, PPI, and retail sales will be key macro triggers of the week.

Disclaimer: This material is not financial advice or a call to action. The analysis presented is the private opinion of its author. Incrypted is not responsible for readers' investment decisions.

Bitcoin and Ethereum - Volatility Compression, CPI Macro Block, and Political Info Noise

Last week, the leading cryptocurrency technically closed our backup scenario, but the quality of price action leaves much to be desired.

The analysis of the BVOL index unequivocally indicates the approach of a powerful impulse, and the overall chart structure currently favors buyers.

The fundamental background is extremely saturated: we see a decrease in the risks of rate hikes following unemployment data, but ahead are key inflation metrics - the Consumer Price Index (CPI), the Core Personal Consumption Expenditures Price Index (PCE), and statistics on the US Gross Domestic Product (GDP).

The political arena is also generating instability: falling pre-election ratings are forcing Trump to make loud statements without real deals. Meanwhile, Democrats have blocked the CLARITY Act due to disputes over project advertising, and the scandal and lawsuits surrounding the scam token TRUMP add nervousness to the market.

All this information veil is intended to dissolve summer liquidity. The recent issuance of 1 billion USDT eloquently indicates the need for major players to secure margin positions.

Let's analyze the priority movement vectors for majors over the next five days.

Bitcoin - Current Scenarios

Scenario A - Impulsive Short Squeeze

Accumulated energy is realized through a dynamic breakout of upper targets $65,391 and $67,255. Collecting this liquidity sends the asset into the $67,000-$70,000 block.

In this zone, it is critically important to see price consolidation above last week's high (PWH) of $65,482 to confirm buyer strength.
Four-hour BTC/USDT chart. Data: TradingView.

Scenario B - Pool Withdrawals and Correction

The price removes one of the upper levels, after which it shows weakness. Longs begin to be fixed, and the asset rapidly goes down.

The market mechanics are such that declines always occur more aggressively and faster than increases. Any negative trigger can set this off - from hot macro statistics to a new escalation in the Middle East.

Targets will be untouched lower liquidity pools.
Four-hour BTC/USDT chart. Data: TradingView.

Scenario C - Sticky Sideways Movement

Regardless of interaction with upper targets, the asset lacks volume for directed movement.

The price is stuck in a narrow flat, similar to last week, continuing to slowly accumulate positions within the current range.
Four-hour BTC/USDT chart. Data: TradingView.

Key Triggers of the Week:

• Consumer Price Index (CPI) report on Wednesday. This is the main catalyst for volatility that will set the trend or be completely ignored by the market maker;
• Senate recess and the freezing of the CLARITY Act until fall. Meanwhile, we are observing hidden liquidity injections from the U.S. Federal Reserve (Fed) into the banking sector --- a sort of targeted QE before the elections;
• Continuation of the corporate earnings season. The S&P 500 index has already rewritten historical highs, and the continuation of this rally could become a locomotive for the crypto market;
• Overall sentiment remains paradoxically positive. The strategy for the week is to shift focus to shorter timeframes, work with assets where there are real volumes, capitalize on local pumps, and strictly trade only our systematic setups.

Ethereum --- Resistance at $2000 and Risk of Manipulation

The main altcoin failed to replicate Bitcoin's priority scenario. We saw a reversal without taking out equal lows (EQL), leaving technical incompleteness.

Currently, the chart is being squeezed under resistance at $1950. There is enough liquidity above, but a dangerous volume of <> has accumulated below.

Confidence in the bullish trend will only emerge after a true breakout and consolidation above the round mark of $2000.

Scenario A --- True Breakout and Consolidation

Simultaneously with the major, the price breaks through the $1950-$2000 zone. The main task is to secure above PWH.

This will open the way to cover the hourly imbalance and gather liquidity left during the recent correction.
Four-hour ETH/USDT chart. Data: TradingView.

Scenario B --- Manipulative Spike and Retracement

The asset collects stops at one of the local highs, loses momentum, and reverses.

The logical outcome is a corrective move to the lower pools to liquidate accumulated margin positions of retail.
Four-hour ETH/USDT chart. Data: TradingView.

Scenario C --- Base Trading Before a Surge

The price enters local consolidation. To maintain bullish potential and prepare for an upward impulse, it is critically important to hold the support range of $1880-$1900.
Four-hour ETH/USDT chart. Data: TradingView.

Trading Tactics

Currently, staying out of the market regarding heavy assets seems to be the wisest decision.

The market very rarely allows the crowd to enter long at comfortable prices without prior harsh manipulation or taking out local lows.

I am considering the option of placing a grid of short orders. A waiting position is currently objectively more advantageous than incurring losses on news <> or verbal political interventions.

Dollar Index --- Deep Dive After NFP Failure, Protecting 99.400 and Awaiting CPI

Retrospective and Current Position

The past trading week ended with a strong selling impulse for the Dollar Index (DXY). The shocking failure of the U.S. labor market report—showing a decrease of 23,000 jobs outside the agricultural sector (Non-Farm Payrolls) against a forecasted increase of 85,000—combined with a slowdown in wage growth, dragged DXY quotes to new local lows.

The bullish structure has completely broken down, and the price has impulsively breached the previous support level (PWL).

Currently, DXY is trading in the range of 99.568-99.600, squeezed within a formed four-hour price imbalance (4H FVG) right at the lower boundaries.

The index is in an accumulation phase ahead of another significant fundamental trigger: Wednesday will bring a fresh CPI report, which, along with data on the Producer Price Index (PPI) and retail sales, will determine the medium-term direction of the U.S. currency.

Technical Picture

On the four-hour timeframe, a bearish Order Flow predominates, but the price has hit a key liquidity block for buyers.

Key structural levels:

• PWH 101.640 — the updated weekly high, acting as a key resistance and technical target for buyers in case of a global reversal;
• PWL 99.400 — the fresh weekly low, current engineering support, and a fixed liquidity pool from below;
• last month's low (PML) 98.919 — a strategic monthly low, serving as the main target for sellers in case of a breakdown of the current accumulation zone;
• 4H FVG zones: directly in the area of the current price 99.50-99.80, a bullish 4H FVG is being traded. Above, there remains a dense uncovered bearish imbalance in the area of 100.70-100.90, and deeper below the monthly low is a block at 98.50-98.80.

Current Trading Scenarios

Scenario A — PWL 99.400 Sweep with Subsequent V-Shaped Recovery

The index makes an impulsive push down, removing liquidity below PWL 99.400, finds aggressive limit demand there, and then forms a bullish reversal by breaking through intermediate resistances and reaching PWH 101.640.
DXY Index Chart. Data: TradingView.

Scenario B — Defending Current 4H FVG and Bounce to Upper Targets

The price holds the current inefficiency zone of 4H FVG 99.50-99.80 without updating the weekly low, forms a consolidation, and develops a gradual upward bounce to the upper imbalance of 100.70-100.90 with the potential for further assault on PWH 101.640.

This allows the market to unload indicators ahead of the macro statistics publication.
DXY Index Chart. Data: TradingView.

Scenario C — Rejection of Bounce, Break of PML, and Move into Deep 4H FVG

On the release of weak inflation data, DXY receives a hard rejection in the current 4H FVG zone, breaks the support PWL 99.400, pierces the monthly low PML 98.919, and goes into a capitulation plunge to the lower block of inefficiency 98.50-98.80.

Such a dollar dump will free up buyers of Bitcoin and Ethereum to target key levels — $67,255 and $2,020+.
DXY Index Chart. Data: TradingView.

News Triggers of the Week:

• Tuesday, August 11, 17:00 ― July existing home sales;
• Wednesday, August 12, 15:30 ― Consumer Price Index (CPI) and Core CPI year-on-year and month-on-month for July. The main macro release of the week;
• Wednesday, August 12, 17:30 ― Crude oil inventories in the U.S.;
• Thursday, August 13, 15:30 ― Producer Price Index (PPI) for July and weekly initial jobless claims;
• Friday, August 14, 15:30 ― Retail sales volume and Core Retail Sales Index for July.

Market Sentiment and Strategy

Ahead of the CPI data release on Wednesday, the DXY is likely to remain constrained within the current range of 99.400-99.800. True volatility and the direction of the medium-term trend will be determined upon the publication of the inflation data.

Action Plan: Until Wednesday, we refrain from medium-term trades in a thin market. We focus on intraday trades on lower timeframes of 1H and below, taking partial profits and making strategic decisions on risk assets only after the closure of four-hour DXY candles.