As expected, BTCCNY finally made a break out of its consolidation pattern as price was already at the peak of the triangle. Bitcoin made an upside breakout, signaling that further price gains are in the cards.
The chart formation spans 3600.00 to 4050.00 so the resulting rally could be of the same size. The 100 SMA is just crossing above the longer-term 200 SMA to indicate that buying pressure is getting stronger. However, if this fails to materialize, sellers could still have a chance to push price down.
Also, the lack of market-moving events could inspire profit-taking to happen, taking BTCCNY back to the broken triangle resistance around 3800.00 for a test of support. If this holds, price could resume its climb.
RSI is already indicating overbought conditions, which also suggests that buyers are getting tired. The oscillator is turning lower to indicate that bullish momentum could fade. Stochastic is also in the overbought zone but hasn’t quite turned down so there may still be some bullish pressure left.
Weaker than expected US jobs data caused bitcoin to break higher against the dollar on Friday and also against its other currency counterparts, as traders are seeking higher returns on riskier holdings. Equities and futures were also higher as the odds of Fed tightening in September seemed lower after the report was published.
Up ahead, central bank announcements from the ECB, BOC, and RBA are lined up so traders might be looking to move funds out of the forex and equities market over to cryptocurrencies to avoid event risk. No actual easing announcements from these central banks are expected for this week but any dovish remarks could lead to huge price swings in traditional financial markets.
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