BTCUSD could be in for a short-term selloff since a head and shoulders pattern can be seen on its 1-hour time frame. Price is still completing the right shoulder but might be due to test the neckline at $410 soon. A break below the $400-410 support could yield a drop to $380 or lower. The head and shoulders pattern is around $30 tall so the breakdown could last by the same amount. For now price is finding resistance at the 100 SMA dynamic inflection point.
Speaking of moving averages, this 100 SMA is above the 200 SMA so there’s still a chance for more gains, possibly taking BTCUSD up to the highs at $420. Stronger bullish momentum could even lead to an upside break past that level.
Stochastic is on the move up so buyers are still in control of price action. However, RSI is giving a different signal since this oscillator is starting to point down to indicate a return in bearish pressure.
BTCUSD could stay in its current range for now since there are no major catalysts on deck. However, the FOMC statement around the middle of the week could spur a strong move, as the Fed biases could dictate longer-term USD direction. Policymakers will update their growth and inflation forecasts this week, along with their dot plot of interest rate expectations.
Hawkish biases or any indication that a couple of rate hikes might still be possible this year could keep USD supported against bitcoin. On the other hand, a more dovish stance could spur losses and allow BTCUSD to resume its climb.
Other central bank events from the BOJ, BOE, and SNB could also influence overall market sentiment and bitcoin action, along with changes in commodity prices.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
