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EUR/USD Near Term Outlook Points To Further Upside In Bitcoin (BTC)

EUR/USD Near Term Outlook Points To Further Upside In Bitcoin (BTC)
Breaking News / Bitcoin / Analytics

The Fiber (EUR/USD) has recently been through an extensive correction that has now seen it retrace to the top of the descending triangle it escaped from earlier. As the pair has found strong support on the previous resistance turned support, we can expect it to continue rallying from here especially as the pair is likely to just break out of a falling wedge. This breakout could result in a completion of the ABCD pattern drawn on the 4H chart for EUR/USD. Recent stance taken by ECB President, Mario Draghi hints that further rate cuts might be on the way for the Euro, and we could see the pair decline against British Pound (GBP) but it still has room to rally against the US Dollar (USD).

When it comes to Bitcoin (BTC), we are more interested in EUR/USD because this is the one forex pair that influences the price of Bitcoin (BTC) the most. This is because Bitcoin (BTC) is paired to the US Dollar (USD) on the most exchanges and the strength of the Dollar primarily depends on the EUR/USD pair. If the Dollar goes up, Bitcoin (BTC) falls and vice versa. At the moment, we expect EUR/USD to rally from here on out towards early July. This gives Bitcoin (BTC) ample room to complete the existing rally. This short term relief rally in EUR/USD after a major downtrend is most likely to be short lived as the ECB is not interested in a strong Euro. Similarly, the US Dollar Currency Index (DXY) might have topped out short term but it is likely to maintain its uptrend long term.

The 4H chart for BTC/USD shows that the big picture remains intact. The price is currently in the UTAD (upthrust after distribution) part of the Wyckoff distribution cycle. Phase C shown on the chart might take  a while to complete as the price could break past the ascending triangle near term and climb above the 38.2% fib retracement from ATH before it tops out. RSI on the 4H time frame shows that there is plenty of room for the price to do that. This chart clearly shows what the price could do in the next few weeks and months from now.

Once Phase C comes to an end, we will see the price current when it enters Phase D and Phase E. This is when we could see BTC/USD decline all the way to $5,000 or even lower levels to complete the ongoing distribution cycle. Weakness in the price action suggests that BTC/USD might not have much strength to rally significantly past $10,000 but from here on out, a rally past $9,600 appears quite promising. Traders that are looking to short Bitcoin (BTC) might want to add to their positions in the next few days based on the price action. Just as it is a good idea to dollar cost average your buy positions, it is also a good idea to dollar cost average your sell or short sell positions.

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