ETHXBT continues to trend lower, finding resistance at the area of interest and channel illustrated in an earlier article. Price is now setting its sights back down and the Fib extension levels provide the next downside targets.
Price found resistance below the 0.01400 handle, which is also below the 200 SMA dynamic inflection point. Speaking of moving averages, the 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. This means that it’s more likely for ETHXBT to drop rather than break out of the channel.
Price is consolidating above the 100 SMA at the moment and a break lower could draw more sellers to the mix. RSI is pointing down and heading south so ETHXBT could follow suit. Stochastic is already in the oversold region and is turning higher, possibly hinting at a return in buying pressure.
Also, the 100 SMA is closing in the 200 SMA so an upward crossover might be due. If that happens, ETHXBT could attempt to break past the resistance and test the next ceiling at 0.01450-0.01500. On the other hand, sustained bearish pressure could bring it down ot the 76.4% extension around 0.01227, which is close to the channel resistance, and stronger selling pressure could take it to the full extension down to 0.01178.
Bitcoin is enjoying support from Chinese investors seeking to hedge their yuan-denominated holdings against the government’s devaluation efforts. However, profit-taking is also coming into play ahead of the Thanksgiving long weekend as traders might want to lock in gains before taking off and enjoying the holidays.
Also, bitcoin is weakening slightly to the dollar due to renewed expectations of a Fed rate hike in December. This has also led bitcoin to consolidate against the dollar, possibly on profit-taking and stronger confidence in the US economy as well.
Zooming out to longer-term time frames of ETHXBT indicates that it is still below a major support zone, which means that bears are very much in control. But with the end of the year fast approaching, the likelihood of profit-taking off these declines is getting stronger.
So far, reports in the bitcoin industry have been mostly positive and the existence of political risks on the horizon could keep it strongly bid. For one, we’ve got the OPEC meeting that could influence crude oil prices and global inflation, and the Italian referendum is also coming up. French and German elections could also pose event risks for next year, along with the Brexit negotiation process, so traders might be more willing to put funds in bitcoin than elsewhere.