Bitcoin prices surged $20 or 3.25 percent today after the PBOC devalued the Yuan at the lowest level in over 5 years. The move higher was followed by Litecoin albeit at a smaller pace of 1.3 percent. As usual, we’ll start with the big brother and move back to LTC later in the article.
Bitcoin Surges 3 Percent
Bitcoin prices rallied 3.25 percent in the early Asian session after the People’s Bank of China moved the USD/CNY fixing to 6.7098 from yesterday’s price of 6.7008. Today the offshore Yuan (USD/CNH) is surging even higher, trading above the onshore rate at 6.7284.
Almost all Bitcoin mining and the majority of trading volume is generated in China. The Yuan exchange rate can have a sizable impact on Bitcoin prices (at least in the short-term) as these traders/miners rush in to hedge their weakening currency. It’s also speculated that Bitcoin is partially used as a means to circumvent China’s currency controls. It’s up for debate how prevalent this is and what impact it may have on BTC prices.
With that out of the way, let’s take a look at the technical picture. Today Bitcoin has had a decisive break above the $614 resistance. This puts us in a rally mode. We’ve also taken out another resistance, the two-month high at $628.25. Bitcoin is now quoted at $634.70 per coin.
The first line of resistance above current prices can be found at the $650 round figure. This is followed by more levels at $670 and $687. Higher up we have another round figure at $700 per coin. All three trends for BTC, the short-, medium- and long-term ones, are now pointing upward.
On the lower end, we will need to see a break below the $600 round level to end the current uptrend. A move below $590 would push prices into a downward trend. Below here we have a cluster of support that starts with the $566 swing low and is followed by $556 and $550 per coin. A break of the $550-$556 support area could lead to more BTC losses.
Litecoin Still in Range
Unlike the big brother, the gains for Litecoin have been milder at only 1.3 percent. We’re now quoted at $3.81, still well below the $4 round figure.
While a decisive break above, $3.90 would classify as a new short-term rally, skittish traders may want to wait for the $4 round figure to fall as well. Resistance levels above here can be found at the $4.07 swing high, followed by $4.15 and resistance area from $4.43 to $4.52 per coin.
On the other end, a clean move below $3.69 could start a new downtrend. Below here we have a support area from $3.50-$3.53. A clearing of this area could extend the gains toward the five-month low at 3.22 per coin.