BTCCNY had been trading inside an ascending channel pattern visible on its short-term time frames but a reversal may be in order as support was broken. Price fell below 4080.00 and the 100 SMA, hinting that the uptrend may be over, but it is still pulling up for a retest of the broken support.
If that area holds as resistance, BTCCNY could make another move lower and perhaps break below the 200 SMA dynamic support this time. If so, the downtrend could ensue and take price down to the lows at 3950.00. However, if the nearby inflection points continue to keep losses in check, price could land back inside the channel and resume its climb up to 4120.00 or higher.
The 100 SMA is still above the longer-term 200 SMA on this time frame so the path of least resistance is to the upside. Also, the long spike suggests that profit-taking after the selloff has been quick and that bulls are still trying to defend the floor.
Stochastic is turning up to show that buyers are regaining control of price action. RSI is still heading south so there may be some selling pressure left but the oscillator is nearing the oversold area. Turning higher could draw more bulls to the mix and allow the climb to resume.
Economic data from China came in line with expectations over the weekend, providing a bit of support for the yuan versus its counterparts like bitcoin. Also, bitcoin has sold off against the dollar at the start of the week so this weakness may have carried on to other cryptocurrency pairs.
A bit of risk aversion was also evident in the financial markets after US data revived hopes of a Fed rate hike and Brexit uncertainties weighed on investors’ appetite for risk as well.