BTCUSD had been consolidating inside a rising wedge pattern before finally making an upside breakout. This means that bullish pressure has increased, putting price on track to testing the longer-term resistance at the top of the ascending channel on the 4-hour time frame.
The 100 SMA is above the 200 SMA so the path of least resistance is to the upside. In that case, price could make it all the way up to the $470 area. However, stochastic is already in the overbought area, suggesting that buying momentum could weaken soon. Similarly RSI is nearing the overbought zone so a return in selling pressure could be seen.
In that case, a pullback to the broken wedge resistance could take place before BTCUSD resumes its longer-term climb. A stronger return in bearish momentum could lead to another test of the wedge support near the moving averages.
Data from the US economy has been mostly weaker than expected since last week while the pick up in commodity prices has spurred risk rallies, favoring bitcoin against the dollar. Should this sentiment persist, BTCUSD could see further upside.
Event risks for today include the release of UK jobs data and speeches from ECB Governor Draghi and BOC head Poloz. The ECB statement is scheduled for Thursday but no actual easing moves are expected for now. With that, market sentiment could continue to drive bitcoin price action for the next few days.
Next week the FOMC statement will take place and market participants appear to be pricing in a downbeat rhetoric given how US retail sales, PPI, and CPI readings have turned out, leading to more dollar weakness.
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