BTCCNY is pausing from its strong rallies late last month to consolidate in a triangle formation. In particular, an ascending triangle can be seen as price made higher lows while finding resistance at 3900.00. Price appears to have bounced off the triangle support and is ready to make a test of resistance again. RSI is pointing up so BTCCNY could be headed north while a slight bullish divergence can be seen. Stochastic is also moving up so BTCCNY could follow suit.
In addition, the 100 SMA is above the longer-term 200 SMA, confirming that the path of least resistance is to the upside. In that case, an upward break from the triangle resistance could be possible if volatility picks up again.
Earlier today China reported a slightly weaker than expected trade surplus of 50 billion USD versus the estimated 55.8 billion USD reading, but what’s positive to note is that imports picked up by 5.1% signaling stronger domestic demand. This could keep Chinese assets afloat and prevent the government from imposing additional capital controls.
Exports also showed a 1.2% gain on dollar terms, slightly lower than the projected 1.5% rise but likely enough to keep the central bank from weakening the yuan. This means that Chinese investors aren’t likely to stage a repeat of their strong influx to bitcoin as seen in May.
Still, market catalysts coming up could convince traders to stay out of fiat currencies in the next few weeks. The FOMC statement is coming up and there’s still uncertainty associated with a potential interest rate hike while the EU referendum in June 23 could prevent traders from putting money on the European currencies and move funds to virtual currencies like bitcoin instead.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
