BTCCNY has formed a tighter consolidation pattern on its 1-hour time frame, forming higher lows and lower highs into a symmetrical triangle formation. Price is currently testing the bottom of the formation, deciding whether to make a bounce or a break.
A break lower could send BTCCNY lower by the same height as the chart formation which is by 160.00. On the other hand, a break past the triangle resistance could lead to as much as 160.00 in gains or at least a test of the highs at 3920.00.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is still to the upside. RSI is slowly moving up to indicate that buyers are in control of BTCCNY price action. However, stochastic is moving south so price could follow suit.
Bitcoin enjoyed strong demand recently as investors flocked to the virtual currency on concerns about Chinese government capital controls and yuan devaluation. Data from China has been mixed, with the latest CPI reading falling short of expectations and showing weaker price levels.
If this sentiment persists, more investors could put their funds in bitcoin and away from Chinese assets or the yuan. There are also plenty of risks in the financial markets these days, thereby driving up demand for alternative assets such as bitcoin.
In particular, the upcoming FOMC decision could discourage traders from putting money on the dollar while EU referendum later on in the month could spur capital flight from European currencies. As for the yuan, any policy changes from the central bank or the government could continue to prop up demand for bitcoin.
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