After the cryptocurrency-markets crashed about 50% last week, things seem to calm down a little bit.
Even though the Coronavirus is still a big threat to the world-economy, it seems like there is light at the end of the tunnel.
While Europe is shutting down its public life and forces their residents to stay at home, South Korea made a big step forward in fighting the virus and preventing it from spreading.
The big picture
By crashing down to 3900$ and forming a 2020 low in price, Bitcoin confirmed a one year support.
That support-line connects the local bottom, Bitcoin formed December 2019 with the (hopefully) local bottom we are forming right now.
The crash in the price of Bitcoin appeared shortly after the price got rejected by the most important long term resistance line.
This resistance, that connects the All-time-high with the top of the last run up (which found his top at approx. 13.800 USD) and the recent top we were forming on February 14th , again proved its significance.
Where are we now?
The price of Bitcoin is trapped in a triangle formation.
On the one hand, the resistance-line showed its strength by keeping Bitcoin from breaking it for two years now.
On the other hand, bitcoin got strong support by the trendline we just got confirmed by seeing good buying pressure at the 3900$ levels.
Either way…
Either way this triangle formation holds big opportunities for traders.
Because of the significance of both, resistance and support, a breaking of one of this trendlines promises by price-movements.
If you compare the charts of stocks, resources and cryptocurrencies, you will realize, that Bitcoin got hit the most.
Why Bitcoin?
Bitcoin is still seen as risky asset. All over the world, shops are closing, people are afraid to go to restaurants, big events are being canceled.
If you assume, that behind these events, there are people losing their existence or have massive financial losses, the first thing this people are selling is risky assets.
Conclusion
At this moment it seems like the markets are taking a short breather from the last weeks selling pressure and stocks and bitcoin are showing signs of a short term price recovery.
Even though there is still uncertainty all over the world about the ability to stop this virus from spreading, the society is making progress in preventing a global pandemic.
If the support-line holds, I expect another test of the resistance-line in the next weeks.
This is not financial advice.
Always make sure to do your own research!
