BTCUSD resumed its climb upon testing support recently, signaling that the uptrend is very much intact. Price found resistance near $740 as expected and is showing another pullback opportunity.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level is at $705, the 50% level is at $710, and the 38.2% level is at $717. The 50% level coincides with a former resistance, which might hold as support moving forward, while the 61.8% level lines up with the 100 SMA dynamic support and the rising trend line connecting the lows of price action since the last week of October.
The 100 SMA is safely above the longer-term 200 SMA on the 1-hour time frame so this short-term uptrend could stay intact. The gap between the moving averages has been sufficiently wide so there is no threat of a downward crossover or reversal anytime soon.
RSI is on the move down to show that sellers are in control of price action while buyers pause from the climb. Profit-taking could be happening, which supports the idea of this ongoing correction. Stochastic is already turning higher without even reaching the oversold region, which means that buyers might be eager to hop in and push for a move back to the previous highs and beyond.
On the longer-term time frames, it can be seen that BTCUSD already broke past the long-term barrier at $700, keeping its track clear towards the next highs at $775. Based on this breakout, the line in the sand for a correction would be the $700 handle as buyers are likely waiting with more long positions at this level. Stronger bullish pressure could eventually trigger a break past $775 and a move to the $800 mark.
There are plenty of market event risks weighing on the US dollar this week, as it has to contend with the upcoming FOMC statement, NFP release, and US elections. All of these have the potential to erase the dollar’s gains depending on the outcome so traders are likely being cautious with their US holdings, seeking gains from other alternative investments instead.
No actual interest rate changes are expected from the FOMC this week since the central bank is likely to hold out ahead of these top-tier catalysts as well. Still, if policymakers retain their hawkish bias and confirm that a December rate hike is on the table, the US dollar could recoup some of its recent losses. Meanwhile, an actual rate hike could yield strong gains for the dollar across the board, potentially bringing BTCUSD below the $700 handle.
Leading indicators for employment are also suggesting some upside for the NFP release, which would reinforce expectations for December tightening, thereby driving the dollar higher across the board also. On the other hand, a very disappointing read could cast doubts on the Fed’s rate hike time line and force the US currency to retreat against bitcoin once more.
Lastly, the US elections promises the highest degree of volatility in terms of bitcoin action against the dollar, as this would tremendously affect market sentiment. A Clinton victory could be very positive for US assets while a Trump win could lead to massive dollar selling, which might favor bitcoin and perhaps gold. The results are set to be announced right around the time that volatility picks up for BTCUSD as well.