Bitcoin Breaks Out to New Local Highs on the Back of Chinese Yuan Devaluation

Finally, Bitcoin has extricated itself from the seemingly never-ending trading range between $620 – 640, although the bulls did not quite have enough juice left to push sustainably above $650. Despite needing a small recharge, the market looks primed for more upside in the coming weeks.
Over the past few months the Bitcoin price has been tracking unusually closely to the USDCNH exchange rate, which has been relatively flat until recently. Last week saw a substantial increase in chatter regarding additional Yuan devaluations going into year end, and last Friday saw the exchange rate hit a multi-year high (meaning a historically weak Yuan). This pushed Bitcoin convincingly above resistance at $630, $640, and $640, although the bulls were unable to hold the $650 level for very long due to short-term overbought conditions. Now price is settling back into a consolidation range for the time being, likely in the $640 – 655 area, in order to reset the indicators, washout weak hands, and find legitimate support. Having said that, the longer term charts continue to look fairly bullish so we are maintaining our upward bias for now.

This post was published at Coin Telegraph on 2016-10-24.