BTCCNY recently made a strong upside breakout from a long-term consolidation pattern. Analysts are attributing the sudden pickup in volatility to renewed buyer interest as authorities appear to be weakening the local currency. Technical indicators on the longer-term chart are suggesting a possible pullback opportunity.
Technical Indicators Signals
The 100 SMA is still above the 200 SMA on this time frame, supporting the idea that further gains are in the cards. However, the moving averages are edging closer together so a downward crossover could be imminent. In that case, sellers could get back in the game and push for a selloff to the nearby support areas.
In particular, BTCCNY might still be able to retreat to the former resistance at 3000.00 before resuming its climb. A larger correction could last until the dynamic support at the moving averages near 2750.00.
Stochastic is already indicating overbought conditions so bulls might need to take a break soon. Similarly RSI is in the overbought region and is starting to turn lower, indicating a return in bearish momentum. Continued gains for BTCCNY could take price to the 2014 highs around 4500.00.
For several analysts, the main reason for the surge in BTCCNY and in bitcoin price across the board was the Chinese government’s weakening of the yuan and imposition of capital controls. This might’ve led investors to move to alternative investments that are not under manipulation by authorities.
Bear in mind that China accounts for a large volume of bitcoin trades as investors in the country convert their holdings to gold, real estate, and cryptocurrencies as a way to circumvent capital restrictions. Continued action from the state in this regard could reinforce demand for bitcoin and lift BTCCNY price in the next few weeks.
Others note that the BTCCNY price surge may have been an early effect of potential price-halving which is set to occur sometime in July. According to Roger Ver himself, the network congestion has reached record levels, which may have also influenced trading volumes.
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