BTCCNY is still stuck in its symmetrical triangle consolidation pattern visible on the 4-hour time frame. Price has been treading carefully lately as traders are likely waiting for bigger market catalysts.
China is set to print top-tier reports towards the end of the week, possibly giving BTCCNY additional volatility. Weak data could encourage more investors to move funds away from the local stock markets and yuan-denominated holdings onto alternative assets such as bitcoin. This has been the case in the past few months as Chinese investors reacted to yuan devaluation and potential capital controls.
The 100 SMA is below the 200 SMA on the 4-hour time frame, suggesting that the path of least resistance is to the downside. These moving averages could also hold as near-term inflection points. Stochastic hasn’t reached the overbought level but is already turning lower, indicating a return in selling pressure. Meanwhile RSI is treading sideways and barely offering any strong directional clues at the moment.
The major reports from China are up for release on Friday so consolidation could persist until then, unless central bank statements from Canada and the UK lead to huge swings in market sentiment. Analysts are expecting to see a smaller GDP reading of 6.8% for Q2 compared to China’s previous 6.9% growth figure.
Industrial production is also expected to have slowed from 7.0% to 6.9% year-over-year in June while retail sales likely dropped from 10.0% to 9.9%. Fixed asset investment could be down from 9.6% to 9.4%, bringing more weakness to China’s stock market and triggering speculations of additional easing from the PBOC, probably in the form of RRR cuts or lower interest rates.
On the other hand, stronger than expected data could spur demand for the yuan and Chinese assets, pushing for a downside break on BTCCNY. This could take price down to the triangle bottom at 3500.00 while an upside breakout could lead to a rally to the triangle top at 5000.00.