BTCUSD has been on a tear lately and seems to have its sights on the June 2016 highs around $760. Price is trading in a sharper ascending channel on its shorter-term time frames and has been consistently bouncing off support, possibly even gearing up for a break past the nearby resistance levels on its ascent.
The 100 SMA is above the longer-term 200 SMA on the daily time frame, indicating that the path of least resistance is to the upside or that the rally could carry on. However, the gap between the moving averages is narrowing, which suggests weakening bullish momentum and that a downward crossover might occur.
If that happens, selling pressure could return and cause BTCUSD to correct. A major retracement could last until the dynamic support at the 100 SMA, which is around the $600 major psychological level. Stochastic is already turning down from the overbought zone, which also indicates that bears are eager to push price back down from these continuous rallies.
RSI is still in the overbought zone but is also showing signs of turning down, possibly leading sellers to reestablish their positions. Stronger selling pressure could lead to a move below the $600 mark onto the 200 SMA at $560-580, which held as support in the past.
On the 1-hour time frame, BTCUSD is still moving around the mid-channel area of interest on its way to the range resistance after recently bouncing off support. A bit of profit-taking could be possible at the top of the channel at $740, spurring another potential test of support at $700, which should offer bulls better prices to catch.
There are several event risks for the US dollar in the next few days, starting with the FOMC statement mid-week. No actual changes to monetary policy are expected for this month, although market watchers are hopeful that the central bank would reaffirm its plans to hike by December, thereby leading to more gains for the dollar.
Next up, there’s the NFP release on Friday, which could seal the deal for a December rate hike. Stronger than expected data could lead to strong rallies for the US dollar against bitcoin as traders get in ahead of a likely tightening move before the end of the year. On the other hand, weak jobs results could push the dollar across the board if they’re low enough to cast doubts on a Fed hike.
Lastly, the US elections at the end of the week could also complicate matters in terms of dollar price action against bitcoin. By the looks of it, the FBI probe on Clinton’s emails has caused her lead against Trump to narrow, with some analysts saying that the outcome of the polls would be too close to call for now. Judging by previous reactions to changes in poll leads, US markets prefer a Clinton victory which could ensure better continuity compared to Trump who would usher in a lot of uncertainty.
Meanwhile, BTCUSD has been gaining support from positive industry developments as more and more institutions work on their own applications of the cryptocurrency. Apart from that, issues in other digital currencies such as ethereum has cemented its strength in terms of network security, although it has also been vulnerable to attacks in the past.