BTCCNY is retreating from its recent strong rally, as traders are booking profits off their long positions. Short-term traders hoping to catch this selloff could still spot a short opportunity on a quick pullback from the recent slide.
Using the Fib tool on the 1-hour time frame shows that the 38.2% level lines up with a broken near-term support around 3650.00-3700.00. This could hold as resistance moving forward, especially since it also lines up with the dynamic inflection point at the 100 SMA.
Speaking of moving averages, the 100 SMA is still above the longer-term 200 SMA so the path of least resistance might still be to the upside. In that case, BTCCNY might push past the Fib levels to retest the highs near 4000.00. However, if selling pressure persists, any of the Fibs could keep gains in check and trigger a drop to 3500.00.
Stochastic is on the move up so there may be some buying pressure left. This indicator is already nearing the overbought zone to indicate that buyers are already feeling exhausted. RSI is starting to turn lower to show that sellers may be taking the upper hand.
With the weekend approaching, it’s understandable that profit-taking activity could be seen for the rest of the week. Keep in mind that the recent surge was spurred ahead of the long weekend in the US last week, as Chinese investors piled their money on bitcoin when the government was rumored to be weakening the yuan and ready to impose capital controls.
It’s hard to imagine if there will be another major event that could spur another surge in BTCCNY of the same magnitude in the near future, especially since data from China has been mostly in line with expectations. For now, there might be no need for the government to intervene so investors could hold on to their remaining holdings of yuan or Chinese assets.
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