Bitcoin (BTC) Finally Crashes But Bears Still Need To Be Very Cautious

Bitcoin (BTC) Finally Crashes But Bears Still Need To Be Very Cautious

Bitcoin has finally started to crash but the bears need to be very careful because there are certain indicators that point to short term bullishness in the market. One of such indicators is the EUR/USD forex pair. The 38.2% fib extension level has been breached and the pair is now resting on top of the 200 MA on the 4H time frame. It is very likely that it could trade higher from here if this level holds as support. If that happens, we could see near term bullishness in the cryptocurrency market as well. If EUR/USD rallies even higher to take out the previous highs, then BTC/USD might follow suit to do the same. This should be a warning to those trying to short the market at this point.

There was a good bearish setup on BTC/USD but that setup has now played out and almost come to fruition. To expect the price of Bitcoin (BTC) to decline straight to $7,200 from here without short term upside would be very unreasonable. We have recently seen many cases of manipulation in the market where the market makers and whales have inflicted serious pain on the bears for trying to short the market. They have been stopping them out at key turning points and this recent crash is likely to lead to the same. At this point it would be a better idea to see what happens next. If the price fails to break past the 200 MA on the 4H time frame, it might be a good opportunity to short the market again.

Bitcoin (BTC) declined in a slow bleed manner this time but that is not all that suggests that this downtrend could be different than the one before. The price is more oversold on the daily time frame than before this time. In addition to that, BTC/USD is now trading very close to the 38.2% fib extension level that extends from the December lows to the yearly high. It is therefore quite improbable for the price to crash in the same manner as it did last time because this level has now become quite a strong support to be broken that easily.

It is very important to wait and see how the price reacts if it rallies higher to test the 200 MA on the 4H time frame again which is very probable. If we don’t see a breakout past that level, it could mean a retest of the 38.2% fib extension level and potentially a crash below it after some sideways movement. However, at this point the probability of a crash below this level remains very low which is why Bitcoin bears might be better off waiting before entering new short positions. That being said, the price remains in bearish territory and a break below the 38.2% fib extension level would be a strong signal that the price could decline sharply to $7,200.

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