BTCCNY has calmed down after its recent slump, consolidating inside a symmetrical triangle pattern with its lower highs and higher lows on the 15-minute time frame. Price is still in the consolidation pattern so a breakout in either direction is possible.
The 100 SMA is below the longer-term 200 SMA on this chart so the path of least resistance might be to the downside, taking BTCCNY to the 5500.00 triangle lows. An upside breakout, on the other hand, could lead to another test of the 7000.00 region.
Stochastic is heading south so BTCCNY price could follow suit while sellers remain in control. RSI is also moving lower so there’s some selling pressure left. However, both oscillators are also nearing the oversold regions and an upward crossover could draw buyers to the mix if they seek to catch the long-term climb at cheaper levels.
In the past few days, the Chinese government has been working hard in reining in offshore investment and bitcoin activity. It has issued warnings to exchanges reiterating the need for KYC and AML checks while reminding investors that bitcoin is not currency and shouldn’t be treated as such. This led to massive liquidation in long BTCCNY positions as investors worried that authorities could take action to restrict bitcoin trading in the mainland.
At the same time, the Chinese central bank’s intervention efforts to set the yuan trading range higher also hurt speculators who were betting on further depreciation of the Chinese currency. For many, this demonstrated the power of the PBOC in terms of influencing financial market movements, causing them to ease up on their speculative positions.
However, bitcoin industry experts have repeatedly emphasized that it would be difficult for authorities to crack down on BTCCNY trading due to the anonymous nature of the network and its transactions. Still, the news was enough to spook many bulls and traders are likely waiting for the jitters to die down before reestablishing their long positions.
From a longer-term standpoint, BTCCNY is still on its uptrend but is currently testing several inflection points. Several reversal candlesticks can be seen on the daily and weekly time frames while the 100 SMA remains above the longer-term 200 SMA on those charts. Also, price seems to be finding support at the rising trend line connecting the lows of price action since last year.
A break below those significant support areas around 6000.00 could be an early signal of an uptrend reversal, likely triggering a test of the 5000.00 area down the line. On the other hand, a bounce could fuel a climb back to the latest highs near 9000.00 but it’s more likely that consolidation could be seen for the near-term.