Best Pairs to Trade During Chinese New Year Part 1

Chinese New Year is around the corner and this year is the year of the Rabbit. The Rabbit is known for its speed. You may already know this from the childhood story of the rabbit and the tortoise competing in a race. The Rabbit’s arrogance ultimately was the deciding factor in that story. 

While the rabbit has some arrogance because it is speedy, it is also known to be earnest in what it does. So, while you may feel like making some quick money, you have to be earnest in following your trading plan. The year of the Rabbit is also a time to be cautious and the same can be said of the markets lately. The year 2022 was a fairly volatile one with inflation hitting the roof in many countries. Cryptocurrencies were also quite volatile in 2022. No one knows what the new Chinese year holds, but being cautious while trading is not a bad thing. Add to that approach your risk management practices and there may be reasons to be optimistic about the year of the Rabbit.

To make you more informed about trading different crypto pairs and using different indicators during Chinese New Year, we are doing a two-part series on trading during Chinese New Year. In this first part of the series, we will look at three pairs that might look interesting to short-term and long-term traders.

Pair #1 – BTCUSD

We have to start any trading series with the oldest and most valuable of all cryptocurrencies – Bitcoin. It is the most commonly traded cryptocurrency pair and has the most liquidity. Additionally, there appears to be an interesting trend with Bitcoin around Chinese New Year. The price of Bitcoin tends to stay soft or even fall from the start of the calendar year till the end of the Chinese New Year holiday. There are various theories trying to explain this behaviour with some concluding that Bitcoin holders cash in by selling Bitcoin to finance their holiday travels. This may be true in China where millions take part in the world’s largest migration.

BTCUSD daily chart (source: Cerus Markets)

Looking at the daily chart for BTCUSD and keeping in mind the past price behaviour around Chinese New Year, one could try and observe whether the price stays rangebound for a few days before breaking out or breaking down. The resistance around the 21500 level has already played out once. If February 2023 is anything like the post-Chinese New Year periods of the past, then a breakout may seem likely. 

A positional trader will attempt to profit from a breakout above 21500 or a breakdown below 20500. A swing trader will look for a channel formation and then go long near the bottom of the channel and short near the top of the channel. Strict stop losses and position sizing are important when trading volatile instruments like cryptocurrencies.

Pair #2 – BTCCNH

Cerus Markets offers its users the ability to trade Bitcoin against the Chinese Renminbi. CNH is the offshore version of the Chinese Yuan (CNY). Trading this pair allows you to trade the volatility arising due to events taking place in China. Plenty is happening in China these days. People are expecting the Chinese economy to bounce back after emerging from a severe coronavirus wave. It could lead to higher demand for Chinese currency and strengthen CNH. At the same time, China is in the middle of geopolitical and geoeconomic struggles. So, the volatility of any pair involving CNH could rise. Higher volatility translates to greater trading opportunities and greater risks.

BTCCNY 15-min chart (source: Cerus Markets)

The 15-minute BTCCNY (CNY is close to CNH) beautifully demonstrates the rangebound price movement of the pair in the days leading up to the Chinese New Year. A trader can keep track of this range/channel and trade any breakout or breakdown. A 15-minute chart is meant for short-term trades. Traders can also use moving averages to get signals of an impending breakout or breakdown. The idea with moving averages is to check for the shorter-term moving average to cross over (or under) the longer-term moving average.

Pair #3 – XRPUSD

XRP is the symbol for Ripple. Cryptocurrency has been in the news lately due to a lawsuit that it is involved in along with the SEC. The outcome of this suit is expected around June 2023 and the development could have far-reaching implications for the cryptocurrency industry. While June is a long way away, the uncertainty that XRP finds itself in makes it an interesting instrument to trade around Chinese New Year. The lawsuit seeks to settle the issue of whether Ripple (XRP) is a security or not. If it is deemed to be a security, then the SEC will declare that the XRP issued to date is not legal as it is an unregistered security. So, the stakes are pretty high and so would the price volatility.

XRPUSD 4-hour chart (source: Cerus Markets)

The 4-hour chart of XRPUSD shows support levels along with recent rangebound movement. The 4-hour timeframe is a good one for swing and positional traders. A trader can also use the Fibonacci retracement tool offered by Cerus Markets to find out how strong the support zone is. The price of XRP appears to have bottomed out around the beginning of 2023. It rose significantly before finding resistance and pulling back. This pullback or retracement can be measured using the Fibonacci indicator.

Through Part 1 of our 2-part series on best pairs to trade during Chinese New Year, we have tried to cover different cryptocurrencies and different trading timeframes as well. We have also discussed a couple of indicators that can be helpful when trading. We would also like to highlight that for any trader, risk management is important. It is highly recommended that you use features like stop loss and alerts to protect your capital. Trading crypto CFDs comes with substantial risk which needs to be carefully managed.

If you want to trade during the auspicious occasion of Chinese New Year, then open an account with Cerus Markets. The process is simple and you can also take advantage of the ongoing 100% welcome bonus offer for new sign-ups. Happy Chinese New Year!

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