Bitcoin seems ready to begin its downtrend. The weekly chart for BTC/USD shows the price struggling hard to remain above the 13 Week EMA. However, a decline from here would put the price right next to the 21 Week EMA which would be very hard to find support on because the bearish momentum that builds up would be really hard to contain. Please note that this time it is not about bridging the CME Futures gap as that is out of the equation and already done. Now a decline from here means a real decline and I don’t think the price would stop around the $8,800s like some retail bulls expect it to.
If the price declines below $9,000 chances are it will close below the 21 Week EMA which means that it would be really hard to expect any bullishness from that point forward. Traders that are convinced that the market is ready to decline would be looking for entry points right now but those that are thinking that we might yet see further upside would want to see a close below the 21 Week EMA before deciding to get out of the market. In my opinion, that is not a very good decision because the decline below the 21 Week EMA could be very brutal at this point. This approach would be more helpful around levels when the price has just found a temporary bottom and there is not much room for downside.
Looking at the 1H chart for ETH/USD we can see that it has found support on the 200 EMA and is thus likely to see some upside. However, it is very important to realize that there is not much room to rally. The price is now trading within a symmetrical triangle which it will soon have to break out of. Chasing any limited upside at this point is not worth the risk/reward. The focus should be on finding good entries if you intend to trade this on the way down. The S&P 500 (SPX) is now also long overdue for a correction which means that if it starts to decline the cryptocurrency market like most emerging markets will be hit the hardest. This has happened before so there is no reason to think this time will be different. It is just not worth the risk/reward to be bullish on Bitcoin (BTC) at this point because the upside is limited and the downside is unlimited.