BTCUSD continues to tread higher but is also having difficulty pushing past its recent highs. Price is stuck in a rising wedge formation visible on the 4-hour chart and is currently testing the resistance.
If this area holds as a ceiling, another test of support around the $755-760 levels could be in the cards. This consolidation could go on until the next big market catalyst rolls along. By the looks of it, the latest ECB announcement wasn’t enough to spur enough volatility in BTCUSD even as risk sentiment flipped back and forth.
Data from China has failed to result in any strong moves as well. Chinese inflation reports came in mixed, with CPI up 2.3% versus the projected 2.2% increase and PPI up 1.5% short of the 2.2% consensus. Prior to this, China printed a smaller than expected trade surplus but underlying components revealed that both imports and exports posted decent gains.
All in all, this might be enough reason for the Chinese government to stall from its aggressive efforts to stimulate domestic consumption and investment, thereby limiting its impact on BTCUSD. Recall that government efforts to curtain offshore investments led to a boost in bitcoin price as mainland investors sought ways to pursue higher returns and a hedge against yuan devaluation.
Next week has the FOMC statement lined up but this could have a minimal impact on the dollar as the odds of a rate hike have been priced in already. Still, this could lead to some profit-taking before or after the event, depending on what Fed policymakers have in mind for future policy moves.
The 100 SMA is above the longer-term 200 SMA on the 4-hour time frame so the path of least resistance is to the upside. Also, the 100 SMA is close to the wedge support, adding to its strength as a potential floor. A break below these moving averages could signal that a reversal from the uptrend is in order.
RSI is still heading up but appears to be turning lower even without reaching the overbought area, hinting that sellers are eager to hop in. Stochastic is indicating overbought conditions, which means that buyers might need to take a break from here and let the bears take over.
A break below the wedge support could lead to a drop to the longer-term support around $680 to 700 but there seems to be no market catalyst left on the docket for the month to spur such a move. In that case, the path of least resistance seems to be to the upside from here as traders could position themselves for the market risks that lie ahead.
Zooming in to shorter-term time frames reveals a small ascending channel that signals that bulls refuse to give up the fight. On the daily and weekly time frames, however, it can be seen that BTCUSD is having trouble extending its move past the yearly highs so profit-taking could lead to some losses before the year comes to a close.