BTCUSD is still moving inside its ascending channel pattern on the 1-hour time frame but a selloff may be in order. Several dojis and spinning tops have formed at the channel resistance around $740 so a drop might be in order.
At the same time, RSI is indicating overbought conditions, which means that buyers are already tired and letting sellers take over from here. Stochastic is also turning down from the overbought zone to show a potential return in selling pressure. If so, BTCUSD could head back towards the bottom of the channel at $720 or lower.
The 100 SMA is still above the 200 SMA on this time frame, though, so the uptrend might stay intact and any selloff could simply offer a chance to buy on the dips. The short-term SMA lines up with the rising channel support, adding to its strength as a floor and inviting bulls to set buy orders at that area. the 200 SMA could serve as the line in the sand for a pullback from the uptrend, as a break below that level would signal the start of a downtrend.
However, the recent consolidation at the channel resistance also appears to be a bullish flag so a long green candle closing past $741 could mark the beginning of a sharper climb, possibly all the way up to the $780 area. This could hinge on the outcome of the US NFP release or the US elections.
The FOMC statement turned out to be a non-event for the dollar as policymakers simply kept policy unchanged as expected. They did make some changes to the wording of their official statement when it came to their assessment of growth, inflation, spending, and investment but the overall cautiously hawkish tone remained the same.
Perhaps what spurred dollar weakness after the announcement was that one member who previously voted to hike was now calling for policy to stay put, slightly dampening expectations for a December hike. Apart from that, state polls showing a very narrow lead between Clinton and Trump are starting to weigh on US markets, causing indices to end in the red for the seventh consecutive trading day.
But before the official election results are announced, the US dollar has to deal with another top-tier catalyst in the form of the NFP report. Leading indicators have been mixed, with the jobs component of the ISM manufacturing survey showing a potential pickup while the ADP report suggested a downside surprise. In any case, a downbeat result could cast further doubt on December tightening and possibly push BTCUSD higher. On the other hand, significantly strong results could seal the deal for a rate hike and spark a much-needed correction for BTCUSD.
Volatility is expected to pick up over the weekend as usual, with traders positioning ahead of the November 8 elections or probably trimming their risk. Election polls could continue to affect market sentiment and therefore dollar action leading up to the actual event and official announcement so traders might seek returns in alternative investments such as bitcoin instead of putting risk on US markets.
Still, a Clinton victory could bring back investor interest in US assets, which might then lend support for the dollar next week. In any case, if you’re bearish, better wait for a test of the $780 resistance or set your stop beyond that level. If you’re bullish, a break past the current ceiling could offer short-term gains while a larger correction could yield better returns.