BTCUSD Price Technical Analysis for 10/20/2016 – Potential Pullback Zones


BTCUSD broke below its short-term consolidation pattern, signaling that buyers would rather enter at bargain levels instead of pushing for a continuation breakout. Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the rising trend line on the 1-hour time frame.

The 100 SMA is crossing below the longer-term 200 SMA, though, which means that bearish pressure is mounting. This could lead to a downside break of the rising trend line, setting BTCUSD on a downtrend. However, price could still draw support from the next area of interest at $612-616.

Stochastic is indicating oversold conditions and is turning higher while RSI is also making its way out of the oversold area to suggest a return in buying momentum. If so, BTCUSD could be able to make its way back up to the swing high around $640 or higher.

Dollar strength was in play yesterday after EU officials have been reiterating the need to make Brexit negotiations difficult for the UK in order to prove the point that leaving the bloc comes at a price. However, German politician Weber mentioned that this could do damage to the euro zone economy as well, reminding investors that there are plenty of uncertainties that this issue could bring to the global economy.

Meanwhile, the Fed remains on track towards hiking interest rates before the end of the year, as the Beige Book confirmed that signs of upward pressure on wages are materializing. Medium-tier US data came in mixed but the safe-haven status of the US dollar and the gains in the equity  market were enough to keep the currency supported.

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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.