Published
4 years ago on
May 31, 2019
Bitcoin (BTC) declined massively in the past 24 hours after a big crash just when everyone got all excited about the price crossing the $9,000 mark. A lot of analysts and experts took to Twitter and other social media platforms to declare victory only to see the price erasing most of those gains by the end of the day. BTC/USD has been long overdue for a correction but a lot of people were a eyeing a retest of the 38.2% fib retracement level from its all-time high as a potential level for a strong rejection that would lead to the price beginning its most anticipated downtrend. However, that seems unlikely as the Dollar is showing no signs of a slowdown against the Euro. The daily chart for EUR/USD shows the pair already trading below the 50 day exponential moving average and within a large descending triangle.
In addition to being constantly being rejected at the 50 Day EMA and being in a descending triangle; EUR/USD is also in a long descending channel that has yet to be broken. If the price could not break this channel for the past few months since the beginning of the year when it had a good opportunity to do so, that means it is merely stalling a sharp move to the downside. The United States seems to be hell bent on keeping the dollar strong. This is what the trade war with China and now the new tariffs on Mexican goods is all about. A strong dollar is bad for the stock market but it is worse for Bitcoin (BTC) as Bitcoin (BTC) is predominantly traded in US Dollar (USD) as most stable coins used for trading cryptocurrencies are pegged to the US Dollar (USD). Meanwhile, the Euro also had quite a run against the Sterling Pound (GBP) and it is now primed for a reversal.
The ascending wedge in which BTC/USD was trading remains intact and the price is trading at the bottom of it as it failed to rise quickly after the rebound. Now, the price has entered a descending triangle that extends all the way to the bottom of this rising wedge. If the price breaks below this triangle, there is a strong probability that it will decline all the way below the rising wedge and end up falling to the 61.8% fib extension level in the $5000s range. This would be extremely devastating for most retail bulls who bought near the top when everyone was screaming for a rally to $10,000 and beyond.
It’s interesting that a lot of well-known analysts and traders did not even think about how the price would react around the extremely psychologically important level of $10,000. Instead, they expected it to climb straight towards $13,000. However, as we have just seen there were a lot of people waiting to sell at $9,000. There is a strong probability that we are not going to see the price rise towards $10,000 for a long time. The market is ready for another downtrend although the price might attempt to test the 38.2% fib retracement from ATH but the most probable scenario is that there is not enough momentum to go up from here and we’re likely to see the price crash in the weeks ahead.
