On Tuesday, April 15, Chinese banks will freeze the accounts of all Chinese bitcoin exchanges. The nationwide freeze comes as a result of a government order, raised through regulatory concern. Many predicted the event would cause a sharp selloff in the digital currency, which would severely damage not just its credibility, but the value of any investors’ holdings. So what is the current state bitcoin, and is the aforementioned scenario likely to play out?
Let’s take a look at the BTCUSD. The first thing to note is the Thursday night/Friday morning decline. Mirrored throughout the cryptocurrency world, the selloff came as the Peoples Bank of China confirmed the action mentioned above through an instruction sent to banks across China. UP until that point, the freeze was just rumor, and its confirmation caused a rapid fall in the BTCUSD to weekly lows at 344.928. The pair quickly recovered however, and having consolidated somewhat over the weekend, has started the week with fresh two-weekly highs at 467.91.
The fresh highs offer up a strong bullish technical bias, despite the looming freeze, making the upside targets the more pertinent for Monday.
The pair is currently trading just shy of Friday resistance, so look for a close above 454.832 to validate a return to intraday highs at 467.912. Beyond that, there is a relatively clear run to monthly highs at 498.70. Bear in mind that the recent rally may hint at a pending short term correction before the bullish momentum resumes. Look for a failed retest of previous resistance at 453.213 to signal the completion of this correction.
Don’t trade blindly higher, however. The BTCUSD has seen some considerable volatility over the past few days, and a downside reversal is not impossible, especially in light of the pending regulation. Friday support at 410.871 and Sunday lows between 382.350 and 388.890 offer up nice risk management parameters. A stop loss just below these levels would ensure a tight exit in the event of a bias reversal.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com