Chinese Yuan Technical Outlook: USD/CNH Upside Capped?

Chinese Yuan, US Dollar, USD/CNH – Technical Outlook:

  • USD/CNH’s broader (downward) correction may not be over
  • USD/CNH is now running into crucial resistance
  • What is the outlook and what are the signposts to watch?

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USD/CNH SHORT-TERM TECHNICAL FORECAST – SLIGHTLY BEARISH

USD/CNH’s rise above immediate resistance last week may have reduced imminent downside risks but it hasn’t altered the broader ongoing correction phase.

USD/CNH has broken above tough converged resistance: the November 21 high of 7.18, the 200-period moving average, and the 89-period moving average on the 240-minute charts. The shorter moving average has served as an important barrier since the downward correction began earlier this month.

USD/CNH Daily Chart

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Chart Created Using TradingView

Importantly, the piercing of the resistance has reduced the odds ofscenario 2 highlighted in the previous update, that is, it has lowered imminent downside risks. However, unless USD/CNH can comfortably stay above the November 9 high of 7.28, those risks appear to be at best deferred than eliminated.

At the moment, the pair is struggling to rise past the 200-period moving average on the 240-minute charts. Moreover, a negative momentum divergence (rising price associated with declining momentum) on the 240-minute chart suggests that USD/CNH’s rebound this month is running out of steam.

USD/CNH 240-minutes Chart

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Chart Created Using TradingView

A key signpost to watch for a renewed decline would be a fall below the immediate cushion at Monday’s low of 7.20, coinciding with a horizontal trendline from November 17. Such a break would trigger a minor double top (Monday highs), pointing to a potential decline toward 7.15. Importantly, the development would raise the chances of a broader range scenario in the interim. In any case, the mid-November low of 7.02 is quite a strong floor to crack.

An alternate scenario is where USD/CNH breaks past the initial barrier at 7.28 to retest the October high of 7.37. The odds of such a scenario appear to be low nevertheless.

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Japanese Yen Technical Outlook: More USD/JPY Weakness Ahead?

US Dollar, Japanese Yen, USD/JPY – Technical Outlook:

  • USD/JPY downward correction may not be over just yet.
  • There is a chance of a drop toward the 200-day moving average
  • What are the signposts to watch?

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USD/JPY SHORT-TERM TECHNICAL FORECAST – SLIGHTLY BEARISH

The failure of USD/JPY to extend gains last week could be a warning sign of some more downside in the near term.

USD/JPY turned lower from the November 21 high 142.25, coming off key resistance on the 89-day moving average. The last time it was decidedly below this barrier was in early 2021. The three-month moving average has now turned into resistance, having acted as support earlier.

USD/JPY 240-minutes Chart

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Chart Created Using TradingView

Importantly, the pair has reversed gains from below 143.00-143.15 (the 50% retracement of the decline on the week of November 7-11) and has failed to cross a similar retracement of the big bearish candlestick that appeared on the daily chart on November 10.

When a large-body candle such as the one created on the weekly chart of November 7-11 and the daily chart on November 10 appears, the 50% retracement of that candle tends to serve as solid resistance from a trend perspective. Big moves are a reflection of greater conviction amongst market participants and an indication of the trend.

{{GUIDE|JPY}}

USD/JPY Daily Chart

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Chart Created Using TradingView

In a case where a large bearish candle appears, the chances of a renewed decline reduce meaningfully if the subsequent rebound clears the halfway mark, as opposed to a condition where that 50% hurdle is not pierced. In the latter case, the chance of a retest of the previous low increases.

USD/JPY is now back near this month’s low of 137.70, flashing a red signal for a drop toward the 200-day moving average (now at about 134.00). For the odds of a decline toward the 200-day moving average to reduce, USD/JPY needs to clear the immediate ceiling is at 142.25. Even then, resistance in the 143.00-143.15 area would remain the line in the sand.

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EUR/USD Technical Outlook: Retreat Imminent?

US Dollar, Euro, EUR/USD – Technical Outlook:

  • EUR/USD has run into significant resistance.
  • The risk of a minor retreat is growing.
  • What are the signposts to watch?

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EUR/USD TECHNICAL FORECAST – SLIGHTLY BEARISH

The recent stalling of momentum is a sign that the Euro’s rally against the US Dollar is showing signs of fatigue, pointing to the risk of an imminent retreat.

EUR/USD has run into major resistance: the 200-day moving average, coinciding with the August high of 1.0370, near the January 2017 low of 1.0340. The 14-day Relative Strength Index is turning around, just as spot tests key resistance. The lack of ‘force’ is a signal that EUR/USD may not be ripe just yet for a break higher.

EUR/USD Daily Chart

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Chart Created Using TradingView

Furthermore, spot has failed to move toward the top end of a rising pitchfork channel in play since October – it has moved to a ‘lower gear’, that is, the bottom part of the channel, indicating fading upward momentum. Indeed, it could retreat slightly in the near term. The risk of retreat was highlighted last week, but the drop then turned out to be shallow.

Any pullback from current levels could push the pair to immediate support at the November 21 low of 1.0225, which could restrict the downside for now. Any break below 1.0225 would trigger a minor double top (the November highs), implying a possible fall toward parity, roughly around a quite-strong cushion at the end-October high of 1.0095, near the 89-day moving average.

EUR/USD 240-minutes Chart

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Chart Created Using TradingView

The three-month moving average recently turned into support from resistance – EUR/USD has stayed under this barrier since mid-2021. Hence, if the two-month rally has legs, the pair needs to stay above the moving average for another push higher. A failure to do so would raise the odds that medium-term downward pressure is returning.

After creating a 20-year low in September, EUR/USD’s 8% gains since is a reflection that the downward pressure has eased somewhat in the near term. However, it may be too soon to conclude that the worst is over for the single currency. A break above the 200-day moving average would be a sign that the medium-term bearish outlook is changing. A decisive push higher could pave the way toward 1.0615 (the 38.2% retracement of the 2021-2022 slide).

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GBP/USD Technical Outlook: Time For a Breather

GBP/USD, BRITISH POUND – Technical Outlook:

  • GBP/USD’s spectacular two-month rally could be due for a breather.
  • To be sure, there are no signs of reversal just yet.
  • What are the signposts to watch?

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GBP/USD SHORT-TERM TECHNICAL FORECAST – NEUTRAL

GBP/USD’s spectacular two-month rally could be due for a breather.

GBP/USD is testing a stiff hurdle on the 200-day moving average for the first time since January, not too far from another significant ceiling at the August high of 1.2300. It was last decisively above the long-term moving average in 2021. Hence a break above the converged barrier will have implications for the medium-term outlook. In recent weeks, the odds that GBP/USD’s downtrend has ‘capitulated’ have grown – first highlighted in October with a follow up last weekend.

GBP/USD Daily Chart

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Chart Created Using TradingView

For the moment, the chances are that cable could soon run its course for now. Granted there are no signs of reversal on intraday and higher timeframe charts. However, on intraday charts, there are indications of fatigue – negative divergence on 180-minutes and 240-minute charts (rising price associated with falling/stalling of momentum).

On its own, the formation of a negative divergence is not enough to ensure a turnaround unless accompanied by a price reversal. In this regard, so far GBP/USD continues to make higher highs on a daily basis, implying that the path of least resistance remains up.

GBP/USD 180-minutes Chart

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Chart Created Using TradingView

At the very least, the pair needs to first stop making new highs. Once it stops making new highs, the focus would shift to immediate support at the November 18 high of 1.1950. A decisive break below 1.1950 would be the first sign that cracks in the rally are emerging, opening the door toward the November 17 low of 1.1760. A piercing of 1.1760 would confirm that the short-term upward pressure had faded.

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S&P 500 and Nasdaq Composite Index Technical Outlook: Looking for a Bullish Break?

S&P 500, SPX, NASDAQ 100, NDX – TECHNICAL OUTLOOK:

  • The S&P 500 index is approaching crucial 200-day moving average resistance.
  • Nasdaq, a laggard compared with the S&P 500, is also beginning to flex muscles.
  • What lies ahead and what are the key levels to watch?

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S&P 500 INDEX SHORT-TERM TECHNICAL OUTLOOK – SLIGHTLY BULLISH

In a holiday-shortened week, the S&P 500 is at a crucial crossroads, a break above which could increase the chances that the medium-term weakness in US equities is beginning to reverse.

The index is testing a ceiling on the 200-day moving average (now at about 4060). Two major attempts this year to cross above the long-term barrier have been unsuccessful. Hence, a clearance above it would solidify the case that this time is different. That is, the rebound may not just be a correction, but could unfold into a larger rally.

S&P 500 Daily Chart

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Chart Created Using TradingView

The chances of an eventual break above the moving average are growing, even if it doesn’t happen in its first attempt. The index held quite a strong cushion at the early-November high of 3912 earlier in the week – a break below that would have been a serious blow to the nascent rally. Furthermore, momentum continues to favor further upside. Importantly, positive divergence (falling index associated with rising momentum) on the monthly charts coupled with a rise this month above October’s high is a sign that the tide could be changing.

S&P 500 Hourly Chart

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Chart Created Using TradingView

How lasting this rebound turns out to be remains a question. In this regard, the August high of 4325 is a key barrier to watch. The index needs to cross above this hurdle to solidify the chances that the worst is over for US equities.

On the downside, 3912 remains immediate and vital support. Any break below would confirm that the short-term uptrend has faded. Moreover, a fall under the floor at the November 3 low of 3698 would raise the odds that medium-term weakness is resuming.

NASDAQ COMPOSITE INDEX SHORT-TERM TECHNICAL OUTLOOK – SLIGHTLY BULLISH

After an initial setback, the Nasdaq 100 index is yet again attempting to rise past the upper edge of a rising channel from mid-October. As highlighted in the previous update earlier in the week, the bias continues to be bullish. Positive divergence on the weekly charts of the Nasdaq 100 index at the October low confirms that the multi-month slide has lost steam.

NASDAQ COMPOSITE Hourly Chart

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Chart Created Using TradingView

The odds are high that the index could rise toward the 200-day moving average (now at about 12610), not too far from the price objective of the minor double bottom (the October and the November lows) of 12750. The last time the index was decisively above the long-term moving average was in January. Hence a cross-over of the average would be a sign that medium-term downward pressure was fading. Still, the August high of 13721 would pose a significant threat to a lasting recovery.

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Bitcoin (BTC), Ethereum (ETH) Weekly Forecast: Potential Short-Term Bounce Ahead

KEY POINTS:

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FALLOUT FROM FTX CONTINUES TO AFFECT CRYPTO MARKETS

The Crypto market as a whole continues to face significant headwinds as the fallout from FTX continues to spread. Crypto exchanges have been struggling to convince customers their assets are safe with a recent data release from CryptoQuant revealing reserves of Bitcoin, Ethereum and Stablecoins have fallen sharply since the FTX scandal. Exchange platforms from Binance to Crypto.com have made an effort by providing full or partial disclosures of their assets as users continue pulling funds.

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The biggest impact of the spread thus far has been experienced by the Gemini Trust Co. who announced a suspension on redemptions at its lending unit while Blockfi Inc. is on the verge of filing for bankruptcy. Genesis have warned investors of a potential bankruptcy filing if it is unable to raise $1 billion dollars in fresh capital to support its lending unit.

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These developments have kept Crypto markets on the back foot struggling to post any significant gains. In a week that saw risk sentiment improve for stocks and the US Dollar retreat following dovish FOMC minutes, both Bitcoin and Ethereum were unable to capitalize as trading volumes continue to decline as well. However, both BTC/USD and ETH/USD remain on course for marginal gains this week heading into the weekend.

ETH/USD TECHNICAL OUTLOOK

ETH/USD Weekly Chart

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Source: TradingView, prepared by Zain Vawda

From a technical perspective, Ethereum (ETH/USD) on the weekly timeframe is trading within a bearish pennant pattern hinting at a downside breakout. There remains the possibility for a push to the upside to retest the descending trendline once more before a downside breakout occurs. However, the 200-day MA lies just above current price around the $1338 area which could halt any attempted push to the upside. A breakout of the pennant pattern to the downside could see a retest of the YTD low print from June 13 that rests around the $864 area.

BTC/USD TECHNICAL OUTLOOK

BTC/USD Weekly Chart

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Source: TradingView, prepared by Zain Vawda

From a technical perspective, BTC/USD has retested the long-trendline from November 2021 and trades just above it. The pair has already seen one false breakout of this trendline in the last week of October before declining back below the trendline. This week has seen the pair post a new YTD low around the $15479 area bouncing of the bottom of a falling wedge pattern. The falling wedge pattern coupled with a break of the long-term (2021) descending trendline hints at a potential bullish move heading into the new week. A move higher faces significant hurdles with the $18000 level (September and October lows) set to provide resistance while a break higher will need to clear the 20-day MA before a break of the falling wedge pattern comes into play. The break of the falling wedge pattern should it occur could take a few weeks to play out and maybe something to keep an eye on.

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Alternatively, a break below the falling wedge pattern would first need to clear the psychological $15000 level which could open up a test of the October 2020 resistance turned support area around $12300.

BTC/USD Daily Chart

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Source: TradingView, prepared by Zain Vawda

Following a bullish engulfing candle close on Tuesday, BTC/USD followed it up with another bullish day before closing as a doji candlestick on Thursday. The doji candlestick close once again highlights the downside pressures on crypto markets at present as this was a day after the dovish FOMC minutes which saw the US dollar index decline.

A daily candle close above the $16800 level will be the first sign of a bullish shift in price action as it would be a higher high for the pair and may see BTC/USD make a run for the $18000 resistance area. The 20-day MA provides short-term resistance resting around the $17000 area at present which could see the rally stall giving the pair an opportunity for a new lower high to form before its next leg higher.

— Written by Zain Vawda for DailyFX.com

Contact and follow Zain on Twitter: @zvawda

Gold (XAU/USD) Solidifies Around Key Zone of Technical Support

Gold Weekly Technical Outlook: Neutral

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What’s Driving Gold Prices?

Gold futures have surrendered a portion of November gains after bulls retreated from a significant zone of technical resistance last week. As the strong recovery from the October low loses steam, a strong barrier of support and resistance continues to form around the key psychological level of $1,750.

With a formation of a dragonfly doji candle on the weekly chart suggestive of indecision, XAU/USD could be looking for a fresh catalyst to drive momentum next week.

Gold (XAU/USD) Weekly Chart

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Chart prepared by Tammy Da Costa using TradingView

As investors continue to focus on monetary policy and recession risks, next week’s economic agenda could assist in driving the safe-haven assets’ next move. Although data releases next week include US GDP, ISM and employment, Wednesday’s Core PCE (personal consumption expenditure) print could pose the biggest threat to the yellow metal.

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Gold (XAU/USD) Technical Analysis

While gold futures settle around $1,750, the 23.6% Fibonacci level of the 2008 – 2020 move lies just above at $1,756.9. A move higher and a retest of the current monthly high at $1,791.8 could open the door for the 50-week MA (moving average) providing additional resistance around $1,808.

Gold (XAU/USD) Daily Chart

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Chart prepared by Tammy Da Costa using TradingView

If gold prices fail to hold above $1,750, a move below $1,734 and a break of $1,716.8 (78.6% Fib retracement of the 2022 move) could drive XAU/USD back towards $1,700.

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New Zealand Dollar Technical Outlook: Rally Could Stall

NZD/USD, NEW ZEALAND DOLLAR – Technical Outlook:

  • New Zealand Dollar has hit solid resistance.
  • NZD/USD could retreat a bit.
  • How much downside and what are the signposts to watch?

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NZD/USD SHORT-TERM TECHNICAL FORECAST – NEUTRAL

After a spectacular six-week rally, the New Zealand dollar appears set to shed some of its recent gains against the US dollar.

NZD/USD, up 14% since mid-October, is now testing solid resistance on the 200-day moving average –a possibility highlighted in the previous update. In addition to the long-term moving average, there is a resistance on a downtrend line from June and a slightly upward sloping trendline from July.

NZD/USD Daily Chart

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Chart Created Using TradingView

While there is no sign of reversal of the uptrend yet, even on intraday charts, negative momentum divergence on the daily and intraday charts (rising price associated with declining or stalling of momentum) indicates that the rally is showing signs of fatigue.

If history is any guide, a retreat would not be surprising. The rallies in late 2021 and early 2022 ran out of steam at the long-term moving average. The pullback in NZD/USD was preceded by a negative momentum divergence, similar to the current divergence.

NZD/USD 240-minutes Chart

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Chart Created Using TradingView

Any retreat could open the way toward last week’s high of 0.6205. Any break below would confirm that the upward pressure had eased, opening the way toward a key cushion at the November 17 low of 0.6060. This support is fairly strong and would be tough to crack, at least on the first attempt. Indeed, the floor could provide a platform for a retest of Thursday’s high of 0.6290.

NZD/USD Weekly Chart

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Chart Created Using TradingView

Looking beyond the short term, NZD/USD last month held major support at the 2020 low of 0.5465. The rally since setting a 31-month low has been convincing, raising the prospect that an interim low is in place.

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Gold and Silver Technical Outlook: Range Play

Gold, XAU/USD, Silver, XAG/USD – Technical Outlook:

  • Gold and silver continue to tread their respective ranges.
  • On their own, this month’s gains in XAU/USD and XAG/USD are not enough to suggest that the outlook for precious metals has changed to bullish.
  • What are the key levels to watch?

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GOLD SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

The limited retreat this week and still-buoyant momentum suggest that gold could make one more attempt to test key resistance that has been held so far this month.

Last week, XAU/USD turned lower from near a key barrier,a bit earlier than anticipated. The converged ceiling is at 1800-1820, which includes the 200-day moving average and at least three trendline resistances – one from the end of 2021, another from July, and the third from August.

XAU/USD Daily Chart

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Chart Created Using TradingView

This follows a break earlier in the month above a key ceiling at the October high of 1729, confirming that downward pressure has faded for now. It is the first time since April that the yellow metal has crossed above an important pivot/price high.

Despite the recent retreat, gold has held a vital cushion – the resistance-turned-support at 1729, roughly around the 38.2% retracement of the November 3-15 rise. Given that the Moving Average Convergence Divergence (MACD) indicator is comfortably in positive territory (indicating that the trend is up), a retest of 1800-1820 can’t be ruled out.

While short-term dynamics point to a ranging scenario, it remains unclear if the rebound this month is a precursor to a reversal (of the downtrend) or a corrective rally given the steep losses this year. In the context of a multi-week picture, the trend remains down.

SILVER SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

While gold has managed to stay under the 200-day moving average, its peer silver briefly rose above the long-term average but failed to stay there. The bearish reversal on November 15, highlighted in last week’s update, has kept a lid on the precious metal.

XAG/USD Daily Chart

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Chart Created Using TradingView

The long-term average in XAG/USD is roughly around another hurdle at the top edge of a slightly upward-sloping channel from August, but slightly below the June high of 22.50. This barrier is critical for the short-term outlook. A decisive break above it could clear the path for further gains in XAG/USD.

On the downside, a cross below Monday’s low of 20.55 would reaffirm the range bias in the near term.

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Bitcoin Technical Outlook: Down But Not Out

Bitcoin, BTC/USD – Technical Outlook:

  • Bitcoin’s failure to extend lower recently is an encouraging sign for bulls.
  • Has BTC/USD capitulated?
  • What are the possible scenarios at the key signposts to watch?

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BITCOIN SHORT-TERM TECHNICAL OUTLOOK – NEUTRAL

The apparent failure of Bitcoin to extend its losses in the past two weeks could be an early sign that cryptocurrencies may have run their bearish course for now.

Granted, price action is still unfolding and BTC/USD could still embark on another leg lower. However, the stalling of the down move recently keeps alive the possibility that the early-November decline could be ‘capitulation’. If this were indeed the case, a base-building process in BTC/USD could be in play – a relatively high probability scenario highlighted on November 15.

BTC/USD Weekly Chart

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Chart Created Using TradingView

Momentum on the weekly chart didn’t make a new low as spot fell below its June bottom of 17590. Momentum is indicative of force, and when support levels are broken with stronger downside conviction, this generally signifies further weakness in price. The 14-week Relative Strength Index (RSI) is now above its June low, suggesting positive momentum divergence (a new low in price associated with a higher low in momentum).

BTC/USD Daily Chart

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Chart Created Using TradingView

One of the signposts to watch for Scenario 1 to play out would be a break above immediate resistance at the mid-November high of 17170. Such a move would indicate that immediate downward pressure is beginning to ease. A stronger signal would be a rise above the November 10 high of 18140, which could bring into play the 5 November high of 21470, near the 200-day moving average.

The second scenario, and a relatively low probability one, would see BTC/USD extend its weakness initially toward the 2019 high of 13895, and possibly lower. A decisive break below the November 9 low of 15510 could be the first signpost to watch for the bearish scenario to unfold.

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