Bitcoin Price Key Highlights
- Bitcoin price is still in a downtrend on its longer-term time frames and today’s market catalyst could allow it to resume its selloff.
- Price has yet to test the descending trend line connecting the highs of price action on the 4-hour chart.
- Technical indicators seem to be hinting that an upside breakout is possible.
Bitcoin price is still deciding whether to bounce from or break above the descending trend line, depending on how U.S. data turns out.
Technical Indicators Signals
The 100 SMA is below the longer-term 200 SMA so the path of least resistance could still be to the downside. However, the gap between the moving averages is narrowing so an upward crossover looks possible. In that case, bullish momentum could pick up and lead to a break above the trend line resistance around $600.
Stochastic is heading north from the oversold region, hinting that sellers are already tired and might let buyers take over. If not, bitcoin price could resume its drop to the nearby support at $560 or lower.
Economic data from the U.S. turned out weaker than expected yesterday, hinting that the upcoming top-tier NFP release could also print downbeat results. The ISM manufacturing PMI tumbled from 52.6 to 49.4, which indicates industry contraction, worse than the estimated fall to 52.0.
Of particular interest is the employment component, which showed another decline for August and hinted of a possible reduction in the total workforce. Analysts are expecting to see a 180K gain in non-farm payrolls for the month, lower than the earlier 255K increase.
Keep in mind that the ADP report featured a significant upgrade in the July figure from 179K to 194K, suggesting that previous NFP readings could also see upward revisions and add to the bottom line jobs gains. This, coupled with upbeat August data, could yield strong gains for the dollar across the board if Fed rate hike odds increase.
On the other hand, downbeat results could lead traders to pare their long dollar positions and yield a rally for bitcoin price.
Charts from SimpleFX