Can Bitcoin (BTC) Fall Lower Than $8,400?

Bitcoin (BTC) has currently seen two consecutive candles close below the 200 MA on the 4H time frame which is a bearish development. Normally, this would be followed by a big move to the downside but this time we are seeing the price resist that move because it still seems to be trading within the falling wedge. It is still likely that we might see BTC/USD decline to the 61.8% fib retracement level around $8,415 but the probability of the price falling much lower at this point has now diminished. A sharp decline from here towards the bottom of the descending channel would be too easy and too obvious which is why it is not likely to happen just yet.

We have seen orchestrated attempts to trap in more bears and I think this will be one of those once again. It is a bearish development that the price has closed below the 200 MA on the 4H time frame but traders would be better off waiting for confirmation on the daily time frame. We have already seen a decline below the 200 Day MA on the daily time frame but now we need to see at least two candles close below the 200 Day EMA on the daily time frame. If we see that happen, then the probability of a decline below the 61.8% fib retracement level would increase. At this point, I doubt that to happen but if it does happen, I would be open to being more bearish short term.

The 4H chart for EUR/USD will play a key role in what Bitcoin (BTC) does from here on out. The Euro faces a similar dilemma against the US Dollar and it is going to be an important development to follow. If EUR/USD ends up rallying from here, then we can see a similar rally in Bitcoin (BTC) and other cryptocurrencies. However, if EUR/USD plunges below the 61.8% and begins its decline, then that would be a point to expect Bitcoin (BTC) to fall even harder towards the bottom of the descending channel. 

The EUR/USD forex pair has historically been a very good leading indicator of what happens in the cryptocurrency market. This is because the strength and weakness of the US Dollar has a strong impact on the price of Bitcoin (BTC) as it is paired to the US Dollar on most exchanges and EUR/USD forms the largest fraction of the Dollar Strength Index (DXY). It is therefore important to keep an eye on this pair to see what happens next in BTC/USD but I remain optimistic that we might see recovery from the 61.8% and a short term rally towards $9,000 or higher levels again.