Bitcoin Price Technical Analysis for 07/01/2016 – Break and Retest!

Bitcoin Price Key Highlights

  • Bitcoin price appears to have made a downside break of the consolidation pattern recently, but a pullback has taken place.
  • Price is retesting the broken support of the ascending triangle pattern visible on the 1-hour time frame, still deciding whether to carry on with its drop or not.

Bitcoin price could be due for a slide to the $400 levels if bearish momentum is strong enough to sustain the selloff.

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Technical Indicators Signals

The moving averages are still oscillating for now, reflecting indecision among buyers and sellers. This could mean that further consolidation is possible, taking bitcoin price back up to the top of the triangle around $435.

However, a convincing downward crossover by the 100 SMA could be enough to confirm that bears are taking control. For now, stochastic is pointing down even without having reached the overbought zone recently while RSI also appears to be on the move down.

A break below the previous lows at $426 could be enough to confirm that selling pressure is taking hold. On the other hand, a climb above $430 could suggest that the spike lower was just a fake out.

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The US dollar has been on a stronger footing against most of its peers at the start of this year, putting a bit of weight on bitcoin price. The Fed just came off a rate hike in December and might be looking to tighten again before the end of this quarter if economic data continues to surpass expectations.

The FOMC minutes released yesterday confirmed that policymakers are noticing the signs of improvement in the labor market but are still doubtful that inflationary pressures could pickup. This week, the release of the NFP report could add fuel to the dollar’s fire if the actual results come in strong.

On the other hand, downbeat jobs data and subdued wage growth could lead to losses for the dollar and consequently a rally in bitcoin price. If the dollar weakens so much, a break past the triangle resistance might even be possible. In that case, bitcoin price could climb back to the previous year highs near $500 eventually.

From a longer-term perspective, the outlook for bitcoin seems to be upbeat this year since the cryptocurrency has gained a lot of traction last year, particularly when it comes to trading volumes and activity. Further developments in the coming months could sustain bitcoin price gains and might allow it to surge past its yearly highs.

Still, given the way financial markets were off to a rough start this year, it appears that the path of least resistance is to the downside. Risk aversion has taken its toll on commodity currencies and other higher-yielding and riskier assets, possibly weighing on bitcoin price and the rest of the virtual currencies as well. Any significant changes in market sentiment over the next few days could push bitcoin price in a clearer direction.

Intraday support level – $426

Intraday resistance level – $435

Technical Indicators Settings:

  • 100 SMA and 200 SMA
  • Stochastic (8, 3, 3)
  • RSI (14)

Charts from Bitstamp, courtesy of TradingView

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