BTCUSD has been consolidating following its recent strong rallies. However, comparing price action to the past consolidation pattern suggests potential continuation. In fact, the recent sideways action could be considered a bullish flag pattern, with an upside break from the resistance likely to set off more gains. After all, the 100 SMA is above the 200 SMA, which means that the path of least resistance is to the upside. In addition, the 100 SMA is widening its lead so bullish pressure is building up.
Stochastic is on the move up so BTCUSD could follow suit. However, RSI is heading south to indicate that sellers may be regaining control. In that case, a downside break from the channel support could inspire a correction to the nearby area of interest at $540.
A larger pullback could last until the 100 SMA dynamic support at $520-530 or the 200 SMA dynamic support at $490-500, which coincides with the previous year highs. Breaks below these levels could mean that a longer-term selloff is in play.
The US dollar has been losing ground against bitcoin following the downbeat NFP report, which dashed hopes of a Fed rate hike in June or July. While Fed policymakers have been hawkish with their biases, Chairperson Yellen has been more balanced and cautious with her views.
In addition, financial market risks stemming from the EU referendum could draw traders away from traditional fiat currencies onto alternative holdings like bitcoin, thereby driving BTCUSD price higher. Brokers have already been adjusting margin requirements for GBP-denominated assets and currency pairs so traders might be keen to move their funds elsewhere.
There are no major reports lined up for the US economy for the rest of the week, keeping sentiment in play. Traders might book profits off the recent rallies to avoid weekend risk.
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