BTCUSD has slowly been crawling down but it seems to have hit a floor already. Bulls are likely waiting at this level, which is an area of interest visible on the 1-hour chart.
The $710-715 area previously held as resistance and now seems to be holding as a floor. The selloff has slowed down and technical indicators might be indicating a return in buying pressure. After all, the 100 SMA is crossing above the 200 SMA to show that the path of least resistance is to the upside. Also, the moving averages line up with the area of interest, adding to its strength as a floor.
Stochastic is still pointing down, though, which means that bears could still take control of BTCUSD price action. RSI is starting to turn higher, reflecting a return in bullish momentum. In that case, bitcoin could make it back up to the recent highs at $740 or higher.
On the other hand, a break below the current levels could put BTCUSD on track towards testing the next support at $700. A break below this level could lead to a move to the $670-680 area from there. So far, traders seem to be returning to their pro-dollar biases after US stock markets are no longer dealing with election-related uncertainty.
Besides, investors also seem to be warming up to the idea of a Trump presidency. After all, the Republican nominee did promise corporate tax cuts and increased infrastructure spending, which would greatly benefit US businesses. Apart from that, the White House and Congress are under Republican control so this should make the process of passing important legislation smoother.
The US dollar is also enjoying a boost in appeal after a couple of Fed officials reminded that a December rate hike is still likely. In the recent weeks, the dollar started to give up ground on concerns that the outcome of the elections could delay tightening. However, analysts also noted that increased fiscal stimulus could be enough to keep economic growth sustained even with a rate hike.
On the longer-term time frames, BTCUSD remains in the middle of forming a large double top formation. It is still far away from the neckline and it would take a break below this level to confirm that a selloff is in order. Still, the path of least resistance for the dollar in terms of market sentiment and fundamentals is to the upside.
Other factors that could push BTCUSD around include any updates regarding the Chinese government’s plans to curb bitcoin trading. Some dismissed these as mere rumors while many remarked that the nature of the bitcoin network would make it nearly impossible for any authority to interfere with bitcoin transactions.
Still, the possibility lingers that China could lose a large bitcoin market, and this is also probably why traders are booking profits off their recent positions. Keep in mind that volatility is expected to pick up closer to the weekend on thin liquidity, owing to bank holidays in France, US, and Canada.