Bitcoin Technical Analysis: February 06, 2020
February 6, 2020
All major cryptocurrencies have advanced in the last 24 hours and the price of Bitcoin is very close to $10 000 resistance levels. The crypto market goes through bullish and bearish phases that hugely influence the price of Bitcoin. Bitcoin has the most effect on the overall market, but we have also seen altcoin-led rallies in the past, known as “alt seasons”. It is important to say that bear trend is still securely in place but according to analysts, 2020 is going to have plenty of general volatility and this could push Bitcoin upwards. Bitcoin is the first cryptocurrency to have existed and receive wide acceptance. Bitcoin can be accessed by everyone on the internet and this cryptocurrency enjoys the support of both developers and users communities. Bitcoin was accepted as a legal payment method in Japan and some other countries also expressed interest to accept this cryptocurrency as a legal payment method. Every day, more businesses accept bitcoins because they want the advantages of doing so, but the list remains small and still needs to grow in order to benefit from network effects. In the chart below (a period from March 2019), I have marked major resistance and support levels which can help us to understand where the price could move. The current resistance levels are $10 000, $12 000 and $13 000, $9 000 and $8 000 represent the strong support levels.
Bitcoin still remains in the bearish phase but if the price advances above $10 000 it could be a good sign of the trend reversal. If the price drops again below $8 000 strong support that would be a strong “SELL” signal and the open way to $7 000. Bitcoin is still very risky, I also think that there are lots of other cryptocurrencies with bigger potential and with less risk. In the chart below we can see how did the price of Bitcoin performs in the last 30 days. On this chart, I have marked a “trendline” and if the price drops below this trendline that will be a “SELL” signal.
Recommendation: The price of Bitcoin has advanced from $9 100 to $9 700 in less than two days but according to technical analysis, this cryptocurrency remains in the bearish phase. The price of Bitcoin currently stands around $9 690 and the first strong sign of recovery could be if the price jumps above $10 000. Bitcoin isn’t the only privacy coin competing for market share and some other cryptocurrencies could potentially limit the adoption of Bitcoin. I would not invest in Bitcoin currently, maybe only as the short-term trader with “stop-loss” and “take profit” orders. If the price jumps above $10 000 that could be a very good opportunity for the short term traders, short-term traders can put the stop loss at $9 600 and take profit at $10 800 or above. If the price drops below $8 000 that would be a strong “SELL” signal and the open way to $7 500 and then to $ 7 000.