Bitcoin could be due for a bounce from this channel bottom but the nearby retracement levels might keep gains in check. The 38.2% Fibonacci retracement level lines up with the mid-channel area of interest at the $7,900 level.
A higher pullback could last until the 61.8% Fib at the channel resistance and $8,200 level as this lines up with the 200 SMA dynamic inflection point. The 100 SMA is below this longer-term moving average to confirm that the path of least resistance is to the downside. Also, the gap between the moving averages is getting wider to signal that bearish momentum is building up.
RSI is pointing up, though, so there could be more room for gains from here. Similarly stochastic is heading north so bitcoin could follow suit while sellers take a break. A bit of bullish divergence can be seen as this oscillator made higher lows while price had lower lows since yesterday.
There haven’t been much developments in the bitcoin industry recently, leaving the cryptocurrency vulnerable to downbeat remarks from Fed officials. After Kashkari’s negative comments, a report from the Federal Reserve branch of San Francisco indicated that the price of bitcoin should be around $1,800 only.
The author wrote:
“…the exchange rate between two currencies can be regarded as a broad measure of the prices of one country’s goods and services relative to another country. When looking at the Bitcoin ‘exchange rate,’ this category of determinants seems to be inapplicable – there is no current native Bitcoin economy with native Bitcoin prices for goods and services.”
Meanwhile, the dollar actually gave up some ground after the release of the FOMC minutes as the transcript hinted at a slower pace of tightening even if inflation overshoots the 2% target. Risks related to fiscal policy and trade activity were also emphasized. Still, bitcoin was barely able to take advantage of this selloff.
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