BTCUSD has been trending higher on the 1-hour and 4-hour charts, with short-term and long-term rising channels seen. Price is attempting a break below the small channel support, which coincides with the 100 SMA.
The 100 SMA is currently above the 200 SMA so the path of least resistance is still to the upside. However, a break below the short-term channel at $420 could lead to a test of the next support around $415. This lines up with the 200 SMA, which might also hold as a dynamic inflection point.
Meanwhile, RSI is treading sideways, indicating potential consolidation. Stochastic is heading south so BTCUSD could follow suit and make its way to the longer-term channel support. If selling pressure is strong enough, price might even break below support and trigger a longer-term selloff.
The US dollar gained ground against its counterparts as risk aversion returned to the financial markets yesterday. This was spurred by a combination of factors, including jawboning from Japanese officials and talks of stronger easing efforts based on the ECB March meeting minutes.
In addition, Fed Chairperson Yellen gave the dollar a boost when she assured that asset prices are not overvalued and that there is no bubble about to burst in the US. She also acknowledged the progress made in moving closer to inflation goals and reaching maximum employment.
There are no major market events lined up for today, which suggests that sentiment could continue to play a larger role in price action. Keep in mind that BTCUSD has been in consolidation for quite some time, paving the way for additional volatility and large breakouts in either direction.
A move higher could lead to a test of the channel resistance at $425 or onto the top of the longer-term range at $435.
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