EUR/USD And Bitcoin (BTC) About To Complete An Inverse H&S Formation

Bitcoin (BTC) is following in the footsteps of EUR/USD to complete an Inverse Head and Shoulders Formation. If this comes to fruition, it could be a big deal for both EUR/USD and Bitcoin (BTC) as it would push both towards not just a recovery, but a bull market. As we have seen in the past, Bitcoin (BTC) is incapable of making its own moves when it comes to certain critical points. In our previous analysis, we explained how Bitcoin (BTC) price action is just a consequence of the price action of major stock market indices like the Nasdaq Composite and S&P 500 Index. Bitcoin (BTC) and the stock market have a strong correlation but Bitcoin (BTC) has an even stronger correlation with EUR/USD.

This is because the rise and fall of EUR/USD directly affects the price of Bitcoin (BTC). If the US Dollar goes down, that directly translates into a rising Bitcoin (BTC) price. The above chart for EUR/USD shows a very clear Inverse Head and Shoulders Formation on the 4H chart. It is pertinent to note here that this formation took more than a month to form. As we have seen in the past, the head and shoulders formation is a very reliable indicator during turning points in markets. This right here is a turning point if the Inverse Head and Shoulders forms as expected, it could result in a bullish EUR/USD which means a bullish Bitcoin (BTC).

Bitcoin (BTC) has failed to make a decisive move so far because the major players that actually influence the price of Bitcoin (BTC) are waiting on the rest of the markets to see where things are headed. Soon as they receive a green signal from the rest of the markets, they are going to pull the trigger on Bitcoin (BTC). The reason for this is that a lot of major investors that can influence the price of Bitcoin (BTC) are not just cryptocurrency investors. This is why they like to see if the rest of the markets can recover before they start buying cryptocurrencies again. Think about this, if for some reason the stock market were to crash today, do you think the price of Bitcoin (BTC) would go up? Well, it might in the long term but short term during the crash it would not be surprising to see it fall below $1,000.

Bitcoin (BTC) is almost close to completing its inverse H&S formation. It is expected to be completed sooner than the one seen on EUR/USD which means that Bitcoin (BTC) will just take the green light from EUR/USD soon as we see the first few green candles on the 4H chart for EUR/USD. After that, BTC/USD would be clear to climb back up towards $6,000 or higher. As far as the recent capitulation is concerned, this seems to have been the bottom. Bitcoin (BTC) is extremely unlikely to fall below $4,000 under normal circumstances.

This is because a fall below $4,000 would mean breaking a 4 years long trend line while also breaking a strong support. After this support is broken, what is to stop Bitcoin (BTC) from settling at $3,500 instead of $1,500 or even $1,000? A fall below $4,000 might result in a quick recovery short term but over the next six months or so, the price is continuously going to swing up and down between those levels. To an investor this may not mean much but to the miners, it would be the end of the game. If the past few days have shown us anything it is that miners wield major influence in running the show. It is unlikely that they are going to allow something that is going to threaten their business and influence.