Bitcoin fell more than $3,000 on Wednesday as investors went into extreme fear mode over the possibility of President Trump levying extra punitive tariffs against various European countries. However, during his speech in Davos, the president pulled back from this measure, allowing Bitcoin to push back to the $90,000 resistance. What’s next for Bitcoin?
$3,000 wick caused by Trump speech
Source: TradingView
In the short-term chart the huge wick down from above $90,000 can be observed. This was almost certainly due to President Trump’s speech at Davos where he walked back on the implementation of sanctions on some European countries, and also withdrew the threat of taking Greenland by force.
The market breathed a sigh of relief, and risk assets such as Bitcoin were given some respite. That said, the crypto sector is still very much back in ‘Extreme Fear’ according to Alternative.me, the crypto market sentiment indicator.
The $BTC price is now trading sideways, above the major ascending trendline, and bumping up against the $90,000 horizontal resistance. The task for the bulls is to get above $90K and turn it back into support. A reentry into the ascending triangle would also be a great achievement. With higher time frame moving averages breaking down, the bulls are going to have to get a decent rally going – and soon.
The RSI at the bottom of the chart looks promising, as the indicator line has broken through the downtrend, and looks to have confirmed the breakout.
BTC price comes down perfectly to golden Fibonacci level
Source: TradingView
If one takes a Fibonacci from the $80,000 bottom up to the rally top at $98,000, it can be seen that the $BTC price came down precisely to the 0.618 Fibonacci level at Wednesday’s $87,000 bottom. This is a perfect retracement to this golden level, and bodes well for a continuation of the bounce.
Nevertheless, the 50-day SMA (blue line) has now aligned with the $90,350 overhead resistance, making this a more difficult barrier for the bulls to surmount. At the same time, the 100-day SMA (green line) is coming down, having formed a barrier to the local high at $98,000.
At the bottom of the chart, the good news is that the Stochastic RSI indicators are turning back around, and the fast blue line is about to cross above the slow orange line. This could signal that the upside rally has in fact already begun.
Bitcoin in last chance saloon
Source: TradingView
In the weekly time frame it can be observed that the 100-week SMA is playing its part over these last several weeks. On Wednesday the price wicked down to this moving average, and it can be seen that this has happened on other occasions as well. It also might be said that if the $BTC price did drop below this average, the bear market would very likely be confirmed.
The Stochastic RSI is starting to perhaps show some signs of concern, as the blue indicator line in particular could be about to roll over. That said, as long as the current rally does not run out of steam, these indicator lines should keep going up.
The $BTC price is at a very critical point right now. Another dump back to $87,000 and below and it would seem very difficult for the bulls to force the price back up again. The bulls are probably in last chance saloon. Will they take advantage and spark a wondrous rally, or is this the last act before being dragged down into the bear market?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.