Bitcoin has done practically nothing but traded sideways if we were to look at the daily chart because it closed below the 38.2% fib extension level once again. However, the same could not be said of Ethereum (ETH) which made quite a few moves of its own and ended up rallying much higher making big moves to the upside shaking out bears who entered shorts just when the price declined below a key support. The price has now broken past that support turned resistance and has run into the 200 EMA on the 4H time frame as well. So, what does all of this tell us about what is happening? Well, if we were to look at BTC/USD, we don’t see this move because it is not in line with what is happening on larger financial markets.
The daily chart for the S&P 500 (SPX) as well as that of EUR/USD better explain what is about to happen. It is the outlook of these charts that has the market makers worried so they try to confuse retail traders short term by pumping the price and running their stops to scare them off and discourage them from shorting the market. The only direction they want you to take is long, to remain bullish on the market when it all crumbles. The near term outlook of the stock market and leading indicators on the stock market like the Russell 2000 are not optimistic at all and all of it spells trouble for Bitcoin (BTC). If we take a look at the ETH/USD chart, we can see that we are very close to the next downtrend. In fact, we are days away from the beginning of the next downtrend.
It might be tempting to buy the dips here but as we can see EUR/USD has consistently failed to break past the 21 day EMA and the S&P 500 (SPX) has declined well below the 50 day EMA. I think all of this point to the strong probability of a major bearish development in the cryptocurrency market in the near future. We are very likely to be on the verge of a strong downtrend in the market which I think could lead to more than a 20% decline in cryptocurrencies like Ethereum (ETH) and even more in the case of other altcoins from current levels. This is why if you are not interested in short selling, the best course of action would be to wait it out and let the price come to you rather than chasing it.