EUR/USD Future Outlook Points To A Short Term Pullback For Bitcoin (BTC)

The long term outlook for EUR/USD and Bitcoin (BTC) is the same. If the Euro goes up, Bitcoin goes up and vice versa. Now, as we have seen in the past, EUR/USD gets to decide the direction of Bitcoin (BTC) especially in times when Bitcoin (BTC) traders are confused as to the future direction of the market. We saw the past few days that EUR/USD found support atop a historical trend line and began a new cycle. However, the price rallied quite aggressively which means we should expect a short term retracement before the rally can resume. The daily chart for EUR/USD already shows that the price has now run into a strong resistance and is likely to fall towards the trend line before it can resume the rally.

It is pertinent to note here that the price may not fall all the way towards the trend line again. It is more likely to be stopped at a critical level, for instance the 21 Day EMA or the previous resistance turned support. However, it will retrace nevertheless and this pullback will directly affect the price of Bitcoin (BTC) short term. We have seen Bitcoin (BTC) rally past $4,000 but now it must fall back into the $3,000s for a retracement. This pullback is expected over the weekend but it may extend on to the next week. So long as the RSI remains overbought, Bitcoin (BTC) is unlikely to continue to rally in the same manner. This is why we will see such retracements along the way. These are not Bitcoin (BTC)’s own moves as Bitcoin (BTC)’s price action is a direct reaction to the price action for EUR/USD.

During periods of strong bullish or bearish outbursts, we see the price of Bitcoin (BTC) act independently of EUR/USD at certain times. However, when there is uncertainty on both sides and the price is trading sideways, we see BTC/USD react directly to the price action on EUR/USD. This is true now more than ever because the whole global economy is in a state of utter confusion and chaos. If the next financial crisis were to happen anytime soon, it would no doubt have a devastating impact on the price of Bitcoin (BTC). We will see Bitcoin (BTC) fall as the rest of the markets. Even if we believe that Bitcoin (BTC) is now ready to be accepted as a safe haven asset and that it will behave more like Gold during a financial crisis, it is still important to note that even Gold falls during a financial crisis, at least temporarily.

The price of Gold declined sharply at first during the last financial crisis. This is because people sell all they have to protect other investments. So, whether Bitcoin (BTC) is considered a safe haven or not, it will fall as the rest of the markets fall. This explains why it is reacting so strongly to major financial markets, now more than ever. However, barring extenuating circumstances, we are likely to see Bitcoin (BTC) complete the IH&S formation that it is trading in. This will ultimately result in a breakout towards Bitcoin (BTC)’s previous market structure and a retest of levels above $6,000 most likely by early 2019.