BTCUSD made a quick drop from its consolidation around the top of the ascending channel on its 4-hour chart. Price now seems to be aiming for another test of the channel support around $580.
If this support continues to hold as a floor, BTCUSD could make another attempt at testing the resistance at $640. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside and the rally could resume at some point. RSI is starting to turn higher from the oversold zone to indicate a return in buying pressure.
Stochastic is still on the move down, though, which means that there’s still some bearish momentum left. This could be enough to bring BTCUSD down to the actual channel support, which lines up with the dynamic support at the moving averages.
Dollar strength resumed on Friday when an FOMC member gave an upbeat assessment of the economy, reviving rate hike expectations for the Fed policy decision this month. Still, most market participants expect the US central bank to stand pat but keep the door open for a December hike.
Upcoming major reports from the US this week, namely retail sales and CPI, could provide more clues on what kind of stance the FOMC might take in their September meeting. Keep in mind that this particular announcement has a press conference to follow so additional volatility is expected for BTCUSD and USD-denominated securities as traders try to interpret Yellen’s remarks.
Other event risks this week include the Bank of England rate decision and UK top-tier economic reports. These could indicate whether or not the economy is starting to feel the pain from the Brexit, which might keep a lid on BTCUSD gains if risk-off vibes return.
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