BTCUSD appears to be breaking above the descending triangle formation visible on its 1-hour chart, signaling that bullish pressure is getting stronger. Price has found near-term resistance around $734 and has since pulled back to the broken triangle top, which is now holding as support.
If the $730 area continues to keep losses in check, BTCUSD could resume its climb and see an upward crossover in moving averages to draw more buyers in the mix. The 100 SMA is below the longer-term 200 SMA for the time being so the path of least resistance is to the downside. In other words, this upside break might be a fake out and bitcoin could still make its way down to the triangle support at $725.
RSI is heading south, which means that bears are in control of price action for now. Stochastic is also turning lower so BTCUSD could follow suit. However, both oscillators are nearing the oversold region already, which means that selling momentum could slow down at some point and allow buyers to regain control.
Upside price targets are at the $750 area of interest or the yearly highs at $780. Downside targets include the spike down to $715 then onto the $700 major psychological support. Zooming out to longer-term time frames shows that BTCUSD is still safely inside its ascending channel pattern, although a sharp selloff could trigger a break lower and a corresponding reversal from the uptrend.
The US dollar is gaining some support from upbeat economic data, as the Q3 GDP reading enjoyed a large revision from 2.9% to 3.2% versus the projected upgrade to 3.0%. The CB consumer confidence index for November rose to 107.1 likely due to the surge in market optimism following the elections. The ADP non-farm employment change is due today and this should provide a preview of the NFP report due on Friday, although these might not have much of an impact on existing Fed rate hike expectations for December.
As for bitcoin, investors still seem to be wary about the impact of Chinese capital controls on their holdings, as seen in BTCCNY’s tight consolidation. Traders might be waiting for more concrete updates confirming that their cryptocurrency holdings won’t be adversely affected. In that case, bitcoin could find fresh upside momentum on an influx of investments, especially since the Chinese government is restricting offshore investments and is still devaluing the yuan.
Another factor that could spur some volatility that might be enough for a break in either direction is profit-taking at the end of the month, which is close to the weekend when volatility usually picks up on thinner market liquidity. With that, make sure you set your stops wide enough to account for potential spikes or close your positions completely as well.
Moving forward, Fed rate hike hopes could continue to keep the dollar supported against bitcoin but news from China are likely to carry more weight. Chinese investors such as Chandler Guo have been emphasizing the appeal of bitcoin, perhaps trying to engineer more upside action from here.