Bitcoin (BTC) is back above $9,000 and could be near $10,000 by the end of the day. This a very interesting development considering CME Bitcoin Futures closed the week at $8,440. If the price does end up rallying past $9,600 before the weekly close, there will be a huge gap to be filled. That makes this week important but there is more to it than that. If we look at the weekly chart for BTC/USD, we can see that Bitcoin (BTC) is now very close to testing the 38.2% fib retracement level from its all-time high. The price flash crashed from $9,451 to $8,850 but soon climbed back above $9,000. Interestingly, this crash occurred very close to the 38.2% fib retracement level from ATH. This means that a lot of sellers were waiting to offload their bags around that mark.
Now, let us analyze the previous market cycle of Bitcoin (BTC). As we can see, the price formed a temporary bottom just like it did this time and it shot up to test the 38.2% fib retracement level from the previous all-time high. It faced a strong rejection at this level and started to decline soon afterwards. It is important to note that the price managed to climb above the Schiff pitchfork just as it has done this time. It would be very unlikely to see the price close above $10,000. The most likely scenario is that this week is going to determine the fate of Bitcoin (BTC) for the months and years ahead. If BTC/USD tests the 38.2% fib retracement level from ATH and climbs slightly above it to begin its decline afterwards, we might see BTC/USD trade sideways for a few weeks before the downtrend begins.
In most of our analyses on BTC/USD, we have mentioned that it is not just about Bitcoin (BTC) which is why we need to consider major economic factors that could influence the price of Bitcoin (BTC) in the future. The daily chart for EUR/USD shows that the pair is in a strong downtrend. EUR/USD closed the last day of the week below the 50 day exponential moving average. This is a very bearish development and we could see it decline towards the bottom of the descending channel in the days and weeks ahead. As the US Dollar rises against the Euro, we will see the price of Bitcoin (BTC) fall.
Another important factor that could make this week the most important weeks since December, 2018 is that the price could leave one of the biggest gaps we have seen in months. As the daily chart for CME Bitcoin Futures shows, these gaps get filled most of the time. So, if BTC/USD ends up rallying above $9,600 to close the week somewhere close to $10,000, we will have a strong reason to start declining as early as next week. This will set the ground for a bearish trend reversal because when the price starts to decline to fill that gap, it will end up breaking the parabolic uptrend.