Bitcoin Price Key Highlights
- Bitcoin price made a sharp break from the recent short-term consolidation and sold off.
- Price still found support at the ascending channel visible on the 1-hour and 4-hour time frames, suggesting that buyers are trying to hold the fort.
- Technical indicators are suggesting that the uptrend could still carry on.
Bitcoin price might be ready to resume its climb now that it’s hovering around several support zones.
Technical Indicators Signals
The 100 SMA is above the 200 SMA on the 4-hour time frame, which means that the path of least resistance is to the upside. Also, the 200 SMA lines up with the bottom of the ascending channel at $600, adding to its strength as a floor. This area also coincides with a former resistance zone so there could be a lot of interest in this psychological level.
Stochastic has already reached the oversold zone and is starting to move higher, indicating a return in buying pressure. This might be enough to take bitcoin price back up to the channel resistance at $640 or at least until the mid-channel area of interest at $620.
The sharp selloff may have been caused by profit-taking ahead of today’s top-tier FOMC event, as any announcement is likely to push the US dollar in a strong direction. An interest rate hike could spur strong gains for the US currency, sending bitcoin price sharply lower to break the channel support and start a longer-term drop.
On the other hand, the lack of hawkish moves or a cautious stance could force dollar bulls to unwind their positions, likely triggering a strong bounce for bitcoin price. This scenario would also keep risk-taking in play, favoring the riskier and higher-yielding bitcoin as well.
Other event risks include the monetary policy statements from the Bank of Japan and the Reserve Bank of New Zealand. No action is expected from the RBNZ while the BOJ might have some stimulus measures or dovish remarks up its sleeve, also triggering strong moves in the financial markets.
Charts from SimpleFX
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