BTCUSD Technical Analysis – Ready to Test Channel Support?


BTCUSD has slowly been grinding higher, moving inside a rising channel pattern on the 1-hour time frame. Price just bounced off the top of the channel and might be ready to test support again.

Stochastic is on the move down so sellers are taking control of BTCUSD action for now. Similarly, RSI appears to be headed south so price might follow suit, taking bitcoin down to $415.

Meanwhile, the 100 SMA just crossed above the 200 SMA to show that the ongoing uptrend could carry on. These moving averages are also near the bottom of the channel, adding to its strength as a potential support area. A bounce off the channel bottom could lead to another test of resistance at $420-425.

The recent FOMC statement weakened dollar demand across the financial markets as risk appetite picked up. The Fed suggested that they might keep interest rates at their low levels for much longer, citing concerns about a global economic slowdown.

Companies and investors welcomed this announcement positively, as the prospect of low borrowing costs could keep credit cheap and encourage spending and investment. US equities closed higher for the second day in a row following the FOMC statement.

Monetary policy statements from the BOE and SNB yesterday reiterated the easing biases across the globe, as central bank officials are more inclined to keep their stimulus measures in place to support their own economies. Last week, the ECB announced another round of rate cuts and an expansion of their QE program while the RBNZ cut interest rates by 0.25%.

Still, profit-taking activity by the end of the week could result to short-term volatility for BTCUSD, especially since we’re approaching a shortened trading week and the end of the first quarter of 2016.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.