Bitcoin (BTC) Bulls Have Nothing To Worry About Yet

Bitcoin (BTC) bulls have nothing to worry about yet. The bullish setup still remains valid and we are still likely to see Bitcoin (BTC) rally towards $9,000 and most likely higher in the weeks ahead. The trend line that we sketched on BTC/USD a long time ago still remains valid. We can see on the daily time frame that this trend line was tested which was followed by downside as we expected. The price did crash harder than I expected. I expected it to find support around the $7,600s area but it ended up falling further. That being said, it was not surprising because we did discuss in the last video how the diamond formation on the chart could be invalidated and broken to the downside and it did happen because it was too obvious and a lot of people were expecting it to play out.

Recent bearishness in the market might have led some traders into losing sight of the big picture but nothing has changed yet. We have yet to see the price test the top of the descending triangle at the very least if not break it to the upside. Those that are more bullish would expect this descending triangle to be invalidated as we have seen in the past. Moreover, just as in the past, we would want to see a retest of the previously broken market structure before further downside can follow. The bullish scenario would be for the price to break past the previous market structure as it did after December, 2018. The price could decline down to the 61.8% fib extension level short term which would be around $7,274. If it holds that level and begins an uptrend then that would be the end of the recent move to the downside.

Bitcoin (BTC) is still trading within a large falling wedge that is very likely to be broken to the upside sooner or later. The same is true of Ethereum (ETH) which has a similar setup to Bitcoin (BTC) on the daily time frame. We expect a retest of the trend line resistance before further downside in the market. The S&P 500 (SPX) could see new highs meanwhile if things ease down with the Trump impeachment. EUR/USD showed some signs of weakness around the same time as BTC/USD which further supports our view that developments in EUR/USD strongly impact what happens in Bitcoin (BTC). However, now that EUR/USD ready to embark on a new uptrend considering the bull trend still remains valid, we could expect a similar uptrend in Bitcoin (BTC) near term.