Bitcoin could be ready to pull up from its slide as price formed an inverse head and shoulders pattern on its 1-hour chart. Price has yet to test the neckline around $7,600 and make an upside break to confirm that an uptrend is underway.
The chart pattern spans $7,000 to $7,600 so the resulting uptrend could be of the same height. The 100 SMA looks ready for an upward crossover to confirm that the path of least resistance is to the upside. In other words, there’s a good chance of seeing an bullish breakout and an uptrend from here.
Stochastic is still heading lower, though, so there may be some bearish pressure left. In that case, bitcoin could still make a brief pullback to nearby support areas, possibly around the moving averages dynamic support zones, before heading back up.
RSI is already pulling higher without even reaching oversold levels to signal that buyers are eager to hop back in. If resistance holds, though, bitcoin could dip back to the lows at $7,000.
Risk aversion appears to keep lifting bitcoin these days as the focus has shifted to a brewing trade war. The US decided to impose higher tariffs on steel and aluminum imports from the EU, Canada and Mexico, prompting retaliatory measures from these trade allies.
Apart from weighing on the dollar, it has also kept a lid on gains in stock markets, driving traders to look for higher returns elsewhere. This is a similar scenario to when political uncertainty in Italy led investors to alternative holdings like bitcoin.
Up ahead, the NFP report could spur more volatility for the dollar as weak results could dampen tightening hopes. Leading indicators have been weaker than expected and featured downgrades in earlier data, so the official report might also disappoint. If not, the dollar could be poised for a rebound against bitcoin.