Bitcoin Bears Could Soon Lose Control

Bitcoin declined below the 200 MA on the 4H time frame and it has finally closed twice consecutively below it. This would normally be a very bearish development leading to significant further downside but as we can see in this case, BTC/USD remains within a falling wedge as well as above the 61.8% fib extension level. Now that the price has tested this level again and held it, it is reasonable to assume that Bitcoin might rally from here until and unless we see a close below the 61.8% fib extension level or a daily close below the 200 Day EMA. It is also important to note that BTC/USD has yet to retest the 200 Day MA which could happen very quickly if the price breaks out of the falling wedge. 

All things considered, this does not seem to be a good spot to be bearish on Bitcoin (BTC). As before, I remain neutral on BTC/USD near term waiting for either bullish or bearish confirmation. So far, we do not have a bearish confirmation and if the price ends up breaking out of the falling wedge, we will have a bullish confirmation and the bears might soon lose control. When that happens, many retail bears would have already been trapped in anticipating a decline to the bottom of the descending channel. This would give the market makers and whales another opportunity to shake them out. Bitcoin (BTC) has shown signs of weakness short term but cryptocurrencies like Ethereum (ETH) are still reluctant to lose ground and for good reason.

If we look at the non-logarithmic ETH/USD chart, we can see that it has long been testing the 61.8% fib retracement level. If it succeeds in breaking out, we would have a bullish frenzy at hand with a series of short squeezes above $200. This should be a strong deterrent for anyone trying to short the market right now. Cryptocurrencies remain in a downtrend and long term we will see a decline but short term the bears need to be very cautious. There is not much reason to be bullish either at this point until we have confirmation of a breakout. The EUR/USD forex pair and Gold (XAU/USD) could once again be the leading indicators to dictate the direction of Bitcoin (BTC). Bitcoin dominance (BTC.D) keeps on declining but we are not close to a breakout in Bitcoin dominance which means an October 25 styled pump can be expected. As for altcoins, if we see Altcoin Dominance (Others.D) rally past the 200 Day MA, we might have an altcoin rally around the corner.