Disclaimer: This article is not intended as an investment advice and published for educational purposes only. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision rather than listening to a stranger over the Internet.
Bitcoin and stocks tumbled amid the panic of COVID-19 and the sell-off could act as a trigger for an impending global recession. JP Morgan has alarmed its bells for the likelihood of a severe global recession. Banks could face loan losses and increased credit defaults further deteriorating the economic outlooks.
The sharp fall in Bitcoin price indicates that it is not immune to the global economic recession. The fall from $8,000 to almost $4,000 on 12th March 2020 in a matter of hours showed that it is strongly correlated to stocks and global economic outlook. Currently hovering around $6,650, BTC looks poised to go sideways with a minor possibility of further downsides.
The coronavirus pandemic is the major catalyst behind this price fall. It is difficult to determine what the future holds and how long it could take to contain the spread. The only option is to wait as the future unfolds.
Let’s dive into the Bitcoin price action.
Monthly:
The monthly time frame is pointing to a bearish outlook when the March closed below 21MA and 34MA, two critical moving averages which provide a strong indication of the future price direction. A close above is generally followed by further gains and a close below indicates upcoming downsides. After price closed below the 21MA and 34MA in March, these moving averages are acting as strong resistance as indicated by a Doji forming for April just below these lines. A failure to close above by the end of April will further strengthen the downsides argument and BTC could be forced to go lower until it finds support. The possible support levels are $4,050 and $3,350, as highlighted by the green lines.
A zoomed in view:
Weekly:
Bitcoin is showing weakness on weekly time frame too. After failing to close above the resistance order block spanning $7,500 – $7,800, it is showing weakness and a low buying interest. The 144MA (in red) at $7,413 is also acting as a strong resistance. If BTC drops lower, the first credible line of defense is 200MA currently at $5,650 (highlighted in purple). The next strong support is Dec 2018 low, highlighted in green order block spanning $4,100 to $3,100.
One key takeaway from the weekly time frame is that price is ranging between 144MA and 200MA, where former is acting as a resistance and latter as support. This has been witnessed in the history of BTC in Dec 2018 – Apr 2019 and Jan 2015 – Nov 2015 where each time price closed above the 144-MA, it continued higher printing exponential gains. In the current times, a close above $8,000 could mark an end of the downsides. However, since BTC never printed a close below 200MA and if this happens, it will be very negative event and it could be followed by a sharp fall. The range between 144MA and 200MA is $5,656 and $7,422 respectively.
Conclusion:
Bitcoin is tumbling along with stock and global economy, but I only look at the charts to speculate upcoming moves and follow the resistance and support lines to determine the future direction. BTC is in no man’s land and only a clean break above the resistance or a strong close below the support could highlight where it can lead in the upcoming months. A break above $8,000 could take BTC to new highs and a close below $3,100 can drag it to new lows.
Disclaimer: This article is not intended as an investment advice and published for educational purposes only. BTC markets are highly volatile and risky in nature. DYOR before making any investment decision rather than listening to a stranger over the Internet.
