BTCUSD is trending lower on its short-term time frames, moving inside a descending channel on its 15-minute chart. Price is now testing the channel resistance and might be ready to resume its selloff to the channel support soon.
The 100 SMA just crossed below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. The 200 SMA is holding as dynamic resistance as it coincides with the top of the channel. A widening gap between the moving averages could be indicative of increased downside pressure.
RSI is indicating overbought conditions, which basically means that buyers are tired from the rally. Stochastic is also turning lower from the overbought level, also hinting at a pickup in selling pressure. In that case, BTCUSD could be on track towards falling towards support at the $980-990 area.
On the other hand, an upside break past the channel resistance could be a sign that longer-term bullish pressure is still in place. After all, bitcoin has been trending higher since the start of the year, even with its sharp pullbacks. The latest one has been spurred by reports that the top two exchanges in China announced that they would be halting client withdrawals for a specified period of time to comply with government anti-money laundering investigations.
Investors appear anxious that further restrictions might be imposed sooner or later, prompting some to liquidate their holdings for fear of having money locked up also. For now, traders are treading carefully so a lot of consolidation could be seen. Once market players feel that the risks have subsided, bitcoin price could resume its climb as seen on longer-term time frames.
Price seems to have dipped below the 4-hour ascending channel but it is still hovering pretty close to support so there’s a chance that the drop could prove to be a fake out. In that case, BTCUSD could have a shot at retesting the channel resistance near $1075-1100 if bullish momentum picks up.
For now, there is also some degree of focus on the dollar as the US currency is also taking some shine away from the cryptocurrency as traders are starting to build up their long USD positions in anticipation of tax reform and financial deregulation. These are expected to provide a strong boost to the corporate sector, which should be good for jobs and spending. This might also push the Fed closer towards hiking interest rates again in the coming months and staying on track with their plan to increase rates three times this year.
Still, any shift in sentiment for the US economy owing to the Trump administration could benefit bitcoin if uncertainty picks up again, barring any major policy changes in China, which is the cryptocurrency’s largest market.