BTCUSD price sold off yesterday but is still inside its ascending channel formation. Price looks ready to test support around $580 and might bounce back to the resistance at $590 or higher.
The 100 SMA is still above the longer-term 200 SMA so the path of least resistance is to the upside. Also, the 100 SMA is holding as dynamic support at the moment, although a larger pullback could still find a floor at the 200 SMA dynamic inflection point.
RSI is on the move down to indicate that sellers are in control of BTCUSD price for now. Stochastic is also heading south so bitcoin could follow suit and go for a lower test of support around $575. A break below this level could signal that a reversal is brewing.
Dollar strength has been in play recently, boosted by US equity gains and a bit of safe-haven buying on weaker commodity prices. China is seeing a slowdown in fuel demand since it has also been producing its own, increasing the global supply glut and weighing on prices.
Data from the US economy has been unimpressive, which led some market participants to predict that the Fed would keep rates low for much longer. This has supported US equity gains, which have in turn supported the dollar against most of its counterparts.
Reports that the UK government might get the Brexit negotiations started earlier next year rather than waiting until the end of 2017 are also adding uncertainty to the mix, weighing on gains of higher-yielding and riskier assets like bitcoin.
Still, this pullback could be enticing for bitcoin bulls to buy the cryptocurrency at cheaper levels. After all, weakness in other financial markets could encourage investors to pursue higher returns in alternative currencies.