BTCUSD appears to have broken above a longer-term consolidation pattern but is now making a correction from the rally. Applying the Fib tool on the latest swing high and low on the 1-hour time frame shows the potential pullback levels. The 61.8% Fibonacci retracement level is closest to the rising trend line connecting the recent lows of BTCUSD price action. In addition, this coincides with an area of interest or former resistance around $660. Also, the potential support zone is within the moving averages’ dynamic inflection points.
Speaking of moving averages, the 100 SMA is still below the longer-term 200 SMA so the path of least resistance might be to the downside. A break below the $650 area could confirm that sellers are taking control of price action.
RSI is heading south which means that selling pressure is in play. Stochastic is also on the move down so BTCUSD could follow suit. But if a bounce off the trend line and area of interest is seen, price could resume its climb to the swing high at $680 or much higher.
A new cloud of uncertainty appears to be looming over the financial markets these days, brought forth by data from China and the worsening Italian banking crisis. This could bring a fresh influx of funds to bitcoin and other alternative currencies as investors seek returns from assets whose prices aren’t exposed to sovereign debt, economic weakness, or central bank action.
Traders might still be holding out for the FOMC statement this month but it looks like the Fed isn’t likely to tighten monetary policy anytime soon. This could keep demand for dollars weak relative to bitcoin, which has shown tremendous upside potential in times of market uncertainty.
