Bitcoin has made its third consecutive close below the 50 day EMA but the price is still holding strong above the 38.2% fib extension level. This is a sign of confidence for Bitcoin bulls as it could lead to a rally to the upside before further downside. If we take a look at the price action on the daily chart, we have seen very high volatility in the last few days. The price action looks quite confusing especially for the past two days but if we take a look at the EUR/USD chart, it all falls into place. The turbulent price action on the EUR/USD pair has had a major impact on the price of Bitcoin (BTC). We saw a strong bounce up back above the 38.2% and the price close above it the day before yesterday but then it ended up facing a retracement and failing to rally higher.
The price is currently at a decision point and we expect Bitcoin (BTC) to make this decision by the end of the month. The price will either have to decline further or rise above the trend line resistance. If the price declines below the trend line resistance and breaks below the 38.2% fib extension level, we would see a sharp decline to the 61.8% which coincides with a price level of around $7,200. A lot of bears had their eyes on this level which is why we have seen misleading price action in the past few days. The market makers cannot just let the bears make free money without taking much of a risk. So, we saw a strong move to the upside that shook out most of the bears and has now trapped some overly optimistic bulls who will feel the heat when the price starts to decline below the 38.2% fib extension level.
If we take a look at Ethereum (ETH), we have reasons to believe that we could see further upside because the price is about to print a similar fractal that we have seen in the recent past. The price could complete its decline by falling down to the 61.8% but the next move, based on the similar fractal would be to the upside. That being said, the price is still part of a large bear flag that is at risk of breaking to the downside any time now. The Fear and Greed Index is now at 42, up 22 points from yesterday which is positive news for the bulls as we are seeing the sentiment turn optimistic. If we take a look at the 15 min chart for ETH/USD, we can see that the price broke a falling wedge to the upside and it could go up from here to test the previously broken key trend line support turned resistance. There is still room for a 5% move to the upside before the price can begin its next downtrend.