BTCUSD price has made a strong rally following an upside breakout from a long-term consolidation pattern. However, price is stalling at a key resistance level and may be prime for a pullback. Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level coincides with a rising trend line connecting the latest lows of BTCUSD price action on the daily time frame. This also lines up with the broken resistance around the $500 previous year highs.
Stochastic is already indicating overbought conditions so profit-taking could be in order. RSI is starting to point down so BTCUSD price might follow suit, dropping back to the support around $450-475, which also line up with the 100 SMA dynamic support.
Speaking of moving averages, the 100 SMA is safely above the 200 SMA for now so the path of least resistance might be to the upside, taking BTCUSD price back up to the previous highs around $600 once the rally resumes.
Bitcoin has drawn a lot of support late last week when Chinese investors flocked to the cryptocurrency on reports that the government is weakening the yuan and might impose capital controls. Earlier today, the Chinese PMI readings came in close to expectations so speculations of easing or intervention have subsided.
Other catalysts for volatility include the release of US NFP data, as traders are on the lookout for signs that the Fed could push through with a rate hike in June or July. In particular, traders are waiting for stronger evidence of wage growth, which might revive demand for the US dollar.
On the other hand, downbeat data could lead to more gains for BTCUSD as this could push back rate hike forecasts. Analysts are expecting to see a 163K increase in hiring for May, slightly stronger than the previous […]
