Bitcoin has formed lower highs and higher lows to create a symmetrical triangle on its 4-hour time frame. Price has just bounced off support and could be due for a test of the resistance.
However, the 100 SMA is below the longer-term 200 SMA on this chart, which suggests that the path of least resistance is to the downside. This suggests that the selloff is still likely to resume from here, especially if the 100 SMA holds as dynamic resistance.
The 200 SMA is right within an area of interest or former support turned resistance around $10,000. Holding as a ceiling could also send bitcoin back to the triangle support around $8000. A move past the middle of the triangle could lead to a test of the top around $10,500-11,000 or perhaps a break higher.
Stochastic is moving up but also dipping into overbought territory. This means that buyers are starting to feel exhausted and may let sellers take over. RSI has more room to climb so buying momentum could stay in play for a bit longer.
So far there have been no negative updates from the G20 Summit pertaining to the cryptocurrency, allowing bitcoin and its peers to stage a relief rally. The next major catalyst might be the FOMC decision as this could be a hawkish announcement.
Traders will be looking at the dot plot forecast in particular since this would signal how many more rate hikes are on the horizon. Three more hikes after this week’s tightening move could be a bullish signal for the dollar, possibly driving BTC/USD back to the bottom of the triangle or on a break lower.
Note that the triangle spans $6,000 to nearly $13,000 so a breakout in either direction could be followed by a rally or selloff of the same height.
A dovish hike or one that’s accompanied by cautious remarks on inflation could lead to dollar weakness and risk appetite, something that has been bullish for bitcoin recently.
Source: Read Full Article