by Jamie Holmes
Recent U.S. Dollar weakness on the more-dovish-than-expected minutes last week from the Federal Reserve has boosted BTC-USD over the past few days, with the market looking to test the critical fractal resistance at $427.99. Risk aversion in markets is likely to continue and bodes well for bitcoin, which is currently trading at $425.67 on the BitStamp exchange, up 0.71 percent on today’s open.
Further moves to the upside for BTC-USD could be precipitated by weaker-than-expected Chinese data tomorrow; Wednesday (02:00 GMT) will see the data for China’s trade balance, growth in exports and imports released for March. If the data is weaker than expected then this could intensify the risk aversion sentiment in markets and push Bitcoin higher against fiat currencies. Economists are forecasting annual growth of 2.5% in exports while the trade balance is anticipated at $30.85 billion.
The chart below illustrates the medium-term outlook with the 4-hour price action on the BitStamp exchange. The price action is above the Ichimoku cloud suggesting buyers are in control. Strong bullish momentum is indicated by the fact that the market is currently well above the most recent fractal sell level which was providing resistance at $421.79 but has now turned to support. The market will be looking to break the next fractal resistance which is at $427.99 and then the next target will be $434.50.
Bullish momentum is indicated by the conversion line which is trending above the base line. Moreover, the relative strength index is trending higher and sits well above 50, suggesting bullish momentum will dominate. However, sellers should look for the index to pass above 70 which will signal overbought conditions in the market and could see a brief reversal. A bearish outlook on this timeframe is indicated only if the market manages to close below the conversion line which is currently offering support at $422.33.
The shorter-term outlook is displayed below with the hourly price action and shows the critical resistance and support levels that market participants should pay attention to. A break above the fractal resistance at $426.67 will see an intensification of bullish momentum, whereas a break below $422.11 will see bearish momentum dominate. Therefore, over the short-term, it is best to wait for a breakout to either side before entering any trades on BTC-USD.
The conversion line is the key support level to watch; if the market pushes below this support level currently at $424.99 then the likelihood of an extended downward move will increase. The Ichimoku cloud is providing support around the $420 psychological level so if a downward trend emerges then this could be a possible reversal zone. The short-term momentum is also in favour of bulls in the market as the relative strength index is comfortably above 50.