BTCUSD has been moving inside a symmetrical triangle on its 4-hour time frame and is currently testing support. A break lower could spur a longer-term selloff for bitcoin, possibly taking price down to the lows at $430 or all the way down to the key support at $400. On the other hand, a break above the triangle resistance could lead to a rally up to the long-term ceiling at $470 or until last year’s highs at $500.
The 100 SMA is above the 200 SMA so the path of least resistance is to the upside and a bounce is possible. In addition, the 100 SMA lines up with the triangle support, adding to its strength as a floor.
Stochastic is on the move down so sellers are in control for now. However, the oscillator is nearing the oversold area so selling pressure could soon be exhausted, giving buyers a chance to take over. Meanwhile, RSI appears to be turning higher to indicate a return in bullish momentum.
Event risks for today include the FOMC minutes, as this could shed more light on the policymakers’ bias. Fed Chairperson Yellen refrained from giving any clues about a June rate hike in their April statement but other FOMC members have been more vocal about their hawkish outlook.
Data from the US surprised to the upside yesterday, further fueling speculations that the Fed can hike rates sooner rather than later. Headline CPI beat expectations with a 0.4% gain versus the 0.3% consensus while industrial production impressed with a 0.7% gain versus the projected 0.4% increase.
Any indication that June tightening is possible could renew dollar demand, possibly triggering a downside break for BTCUSD. On the other hand, cautious rhetoric could keep the dollar’s gains limited for now.
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