BTCCNY has formed higher lows and lower highs, creating a symmetrical triangle formation on its 4-hour time frame. Price is currently testing the triangle support and seems ready for a bounce.
RSI is on the move up, indicating that buyers are taking control of BTCCNY price action. Similarly, stochastic is turning higher so bitcoin price could follow suit. However, the 100 SMA appears to be crossing below the longer-term 200 SMA to show a buildup in selling pressure.
In that case, a downside break from the triangle support could still be possible. In that case, a longer-term selloff could ensue. But if buyers put up a fight, a test of the triangle resistance or even an upside breakout could be in the cards.
Yuan devaluation is taking place these days as the Chinese central bank and government are trying to adjust monetary policy to the growing global economic risks. This could discourage traders from putting money in the local Chinese markets and move their funds to alternative assets like bitcoin instead.
This has been one of the main factors that triggered a strong upside breakout and additional volatility in BTCCNY action in late May this year, leading to strong and sustained rallies for the cryptocurrency. For now, it looks like traders are still booking profits off their previous positions now that the EU referendum is over.
Moving forward, the Brexit process could bring more uncertainties to the global financial markets, perhaps even leading central banks to ease monetary policy or devalue their own currencies. This could lead to stronger demand for gold and bitcoin, which have benefitted from increased uncertainty in traditional financial markets.
Keep in mind that strong breakouts and rallies typically occur during the weekend and early on until the start of trading in the following week.