BTCUSD recently formed a head and shoulders pattern, with price breaking below the neckline and pulling up for a retest. This broken support zone seems to be holding as resistance for now as it lines up with the 100 SMA dynamic inflection point.
Speaking of moving averages, the 100 SMA is below the 200 SMA so the downtrend could carry on. Price has yet to break below the $645-650 area of interest before more sellers join the mix. RSI is on middle ground, pausing on its way down, while stochastic is pointing south so BTCUSD could head in the same direction.
In that case, price could be eyeing the next support around the $625-630 lows then at the major psychological $600 level. A break below that area could lead to a drop to the next key support around $575.
Catalysts for such move include the FOMC statement today, even though the Fed is likely to keep interest rates on hold. Upbeat remarks and indications that a rate hike or two are still possible this year could reinforce dollar demand against bitcoin. On the other hand, cautious comments on a potential global economic slowdown due to the Brexit could lead to a return in bitcoin rallies.
For now, the drop in commodity prices is also dragging BTCUSD lower, as this has kept risk-off moves in play. Traders are projecting that stockpiles could rise now that production has resumed in several key areas and demand during the summer months is weaker.
In any case, watch out for additional volatility around the FOMC statement since there is no press conference scheduled and traders will read between the lines of the announcement to spot any changes in monetary policy bias. US durable goods orders data are up for release ahead of the Fed announcement.