The recent hack on a Hong Kong bitcoin exchange spurred a sharp drop in BTCUSD. Price has bounced off the $480 area but appears ready to resume its slide if the retracement levels hold.
Drawing a Fib retracement on the latest swing high and low on the 4-hour chart shows that the 50% level lines up with a former support zone. If this holds as resistance, BTCUSD could slide back to the swing low at $480 or even lower. A larger retracement could last until the 61.8% Fibonacci retracement level closer to $600.
The 100 SMA is treading below the longer-term 200 SMA, confirming that the path of least resistance is to the downside. In addition, the gap between the moving averages is widening so bearish pressure is strengthening.
Meanwhile, stochastic is on the move up for now to indicate that buyers are in control of price action, keeping the correction in play. Similarly RSI is heading north so BTCUSD could follow suit while sellers also book profits off their recent short positions.
The slump in commodity prices could also weigh on bitcoin price once more, as this prevents traders from taking on more risk and pursuing higher-yielding holdings like bitcoin. Meanwhile, downbeat data from the US economy could keep a lid on dollar gains if the figures are enough to douse Fed rate hike hopes for September.
The US is set to release its official jobs report on Friday and leading indicators are giving mixed signals. The ISM manufacturing and non-manufacturing surveys both showed declines in their jobs components but the ADP non-farm employment change report churned out a stronger than expected gain for July.
Another possible catalyst for market action this week is today’s Bank of England rate decision since market watchers are gearing up for a rate cut. An additional boost to their bond purchases program could spark volatility across the financial markets, including bitcoin.