The Euro has finally formed a double top against the US Dollar which has now increased the probability of a move to the upside in the EUR/USD forex pair. The 4H chart shows this double bottom and the range that the pair has been trading in since it declined below the 38.2% fib extension level. There is a good chance that the pair will keep on trading within this range even if it sees further upside for now. However, if it ends up closing the week with a move to the upside, this will be a very bullish development for the cryptocurrency market.
When the EUR/USD forex pair declined below the 38.2%, it closed the week without completing the move down to the 61.8% fib extension level. Professional traders were aware of this and they expected this move to be completed next week which is why they were more bearish on cryptocurrencies during the weekend and this is how we saw a massive crash in the price of Bitcoin (BTC) and other cryptocurrencies. If we see the EUR/USD forex pair end the week close to the 38.2%, many traders will expect a retest of that level next week which would make them bullish on Bitcoin (BTC) this weekend. That being said, it is very important to be cautious because BTC/USD is now very close to topping out short term. However, a move towards $8,000 is still quite likely.
The 4H chart for BTC/USD shows how there is little room for the price to rally higher from here. It is expected to break out of this falling wedge but that is unlikely to happen under such overbought conditions. The most probable scenario would be a move out of this falling wedge towards $8,000 that would have many traders thinking that a big pump is in the making which would likely fail and result in another downtrend in the days ahead.
Bitcoin (BTC) could make another pump similar to what it has in the past either at this point or at a later point after a near term correction. However, it is important not to be distracted by these moves because the major trend is to the downside. The focus should remain on BTC/USD declining down to $5,500 and potentially much lower during the next downtrend. This bear market is a long way from being over just yet which is why any bullish positions ought to be entered with extreme caution and tight risk management.