• Douglas Tan

Coronavirus worries impact global markets - will Bitcoin price follow suit?



Bad news tends to travel faster than good news. Fears surrounding the continued spread of coronavirus out of China are making some institutional investors and traders take a precautionary stance in the market.


Markets can be driven by fear and greed. This global slowdown surrounding uncertainty in China may apply pressure to commodities like gold, given that China is one of the biggest buyers.


Taking into account this sentiment, let’s take a look at Bitcoin price action and some potential scenarios that could play out in the next several days.


Analysis of BTC / USD pair on January 22nd 2020 at 17:55 (UTC + 7), using 6H time frame, with parabolic SAR, moving average (MA), Fibonacci, stoch RSI, as well as MACD for the indicators.


Some key points to note regarding the latest price action:

- Current price action is hovering around Fibonacci 0.786, or around $8,654

- Bullish trend is still intact, due to price movement over the breakout line, in the $8,300 area

- Parabolic SAR tends to suggest Bitcoin downtrend scenario (short-term)

- Moving Average (100) slowly crawls up to $7,979 level

- Stoch RSI is just below 25, which signals oversold territory or seller exhaustion

- MACD almost reaches histogram, pointing current mid-term bullish bias

With that being said, I’d like to draw out two potential scenarios.


Scenario 1 :

Bullish consolidation at Fibonacci 0.786 or around $8,600, with possible minor correction to Fibonacci 0.618 and 0.5 ($8,300 and $8,000 respectively), along with MA 100 movement above $8,000.

If this scenario plays out and respects the Fibonacci level, there will be enough thrust to propel the price back to previous resistance at $9,183, challenging the next resistance at $9,500 and $10,500.

In addition, stoch RSI reading is well below 25 in oversold territory, which attracts buyers to step in. MACD is also still above the histogram chart.


Scenario 2 :

Bearish bias with price action might correct to Fibonacci 0.5, all the way down to 0.236 or around $7,400. With price level at 0.236, it would be considered a reversal into a downtrend. Breakout line (green line) at $8,000 is respected as long as it can hold the price above it.

Additionally, parabolic SAR (lagging indicator) shows short-term downtrend, which signals sellers might want to jump in a little bit more.


For this 6H time frame, here are some key level to watch out :

Strong Support at $8,000

Strong Resistance at $9,100


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