• Douglas Tan

US-China Trade Deal may calm BTC price action for a while, before moving to its next state.

As Trump signed the first trade deal with China on January 15th 2020, the entire financial market is embracing this supportive global gesture. Hopefully the de-escalation of trade disputes last longer, so entire market may benefit.

The China trade deal seems to have had a calming effect on BTC price action, which may signal sideways movement over the coming days.

Now, as we incorporate several indicators and marry them with the trade deal news, we can draw several possibilities for BTC price action (analysis of BTC/USD pair on January 16th 2020, using 6-hour timeframe, moving average, and Stock RSI as well as MACD).

As shown above, we can see the fast moving-average (MA) 9 has crossed over the slower MA 26, at price level around $7,300, which implies an uptrend. Furthermore, when the price action touched $8,400, a pullback happened to $7,700 (perfectly respected the MA 26 line), and once again hiked to $8,400 which was the first resistance before going higher to the $8,890 price level. MA 100, on the other hand is still climbing up at the $7,600 price level, signaling a gap to get closer to MA 9 and MA 26.

Stoch RSI for the 6-hour timeframe is reading at 53, signaling market is neither at overbought nor oversold, contrasting the previous reading at 93 (oversold). This made the market rush to sell their inventory (taking profit) and brought down prices back to $8,500.

In addition, momentum oscillators like MACD 6h clearly signals an uptrend when there is a crossover between two MA lines while simultaneously moving up and away from the MACD histogram itself. The crossover also happened when correction occurred but didn’t exceed the histogram, signalling the uptrend bias is still intact.

My main takeaways regarding these readings are :

- Using all these indicators, as well as respecting moving average with 6h timeframe, it is believed that price action is still in its uptrend bias. MA 100 is still well below the current price level (MA 100 - $7,600; Current Price $8,600)

- With the Stoch RSI with reading at 50, the market is still indecisive about the current state of short-term and mid-term bias. Better to not take action during this time

- Additionally, MACD still remains in an uptrend with the MA lines well above the histogram

- Indicators seem to suggest the coming days/weeks will have price hovering around $8,400 - $8,900 before continuing its current upward trend.

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