BTCUSD has been trending higher on its 4-hour chart, moving inside an ascending channel pattern. Price is now testing this channel’s support level, still deciding whether to go for a bounce or a break.
On the one hand, BTCUSD has come off two consecutive downside breaks of consolidation, signaling that bears have enough momentum. On the other hand, the overall trend is still up so bulls could put up a fight.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, supporting the idea of a bounce. In that case, BTCUSD could make it back up to the top of the channel near $640 or higher. Also, the 200 SMA lines up with the channel support at $595, adding to its strength as a floor.
Stochastic is already indicating oversold conditions and turning higher, which means that sellers are feeling exhausted and allowing buyers to take over. RSI is also turning up from the oversold region and heading up so bitcoin price could follow suit.
Still, the FOMC decision to keep rates on hold for now while motioning that a December hike is possible has kept the dollar supported. Further data confirmation showing that the US economy continues to improve would make this tightening scenario more plausible, thereby driving up dollar demand against bitcoin.
The next major release would be the September NFP report and a strong read could seal the deal on a Fed hike before the end of the year, likely triggering a downside break from this channel. Risk aversion is also likely to weigh on bitcoin demand on expectations of higher borrowing costs. Until then, a bit of consolidation could be expected as market watchers wait for clearer catalysts.
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