BTCUSD hasn’t made much headway in any direction over the Thanksgiving holidays as liquidity was thin. Price has formed lower highs since testing the yearly highs and found support around $730, creating a descending triangle formation visible on the 1-hour chart.
Price is moving towards the peak of the formation so a breakout is imminent. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside, which means that a break lower might be more likely than an upside breakout. Also, the 100 SMA is holding as dynamic resistance near the top of the triangle.
A break to the downside could spur a test of the longer-term channel support at $720, possibly allowing BTCUSD to still stay afloat and even make its way back up to the resistance near $750 or onto the top of the channel. On the other hand, a break higher could encounter a bit of a ceiling at the 200 SMA dynamic resistance before attempting to climb again.
RSI is on the move up so BTCUSD could follow suit as buyers stay in control of price action. Stochastic is on its way down to indicate that sellers are on top of their game but the oscillator appears to be turning halfway, suggesting a return in buying pressure.
BTCUSD is under renewed downside pressure as reports released over the weekend suggest that Chinese regulators are still looking into ways to curb business investment abroad, which might impact inflows and outflows of bitcoin. Keep in mind that China is bitcoin’s largest market so a drop in activity in this region could mean significant downside for prices. For now, investors are on hold and staying on the lookout for more updates.
Also, dollar demand could dampen BTCUSD gains this week, especially with the NFP up for release. Odds of a Fed rate hike in December appear to be fully priced in already but an impressive NFP reading could seal the deal and lend more upside for the dollar. On the other hand, disappointing results could still cast doubts on December tightening or lead traders to conclude that the US central bank won’t be hiking again anytime soon.
In the meantime, election recount news are starting to eat up the dollar’s gains, as this could bring some uncertainty to the mix. Although Clinton already conceded to Trump, her team will be monitoring the recount in Wisconsin to see if there was any case of election fraud that could potentially lead more folks to question the overall results.
Other factors that could affect market sentiment and BTCUSD trading in the coming days include the OPEC meeting. Expectations that an output deal will be signed this week have propped up crude oil over the past few days but rumor has it that Iran is still refusing to cooperate and that their talks with Saudi Arabia broke down, dampening the likelihood that an agreement will be made. In that case, risk-off flows could favor the US dollar across the board and drag BTCUSD lower along with it.