EUR/USD Forex Pair Indicates When Bitcoin (BTC) Could Make Its Next Move

The EUR/USD forex pair has historically had a strong impact on the price of Bitcoin (BTC). In fact, the recent market crash had a lot to do with a decline in this pair. Now that we have seen the pair decline down to the 61.8% fib extension level, it has room to rally sideways before the next big move. It is not clear yet which way the pair will swing after that but there is a strong probability of a break below the 61.8% fib extension level if the price ends up breaking below the symmetrical triangle. Regardless of which way it could break, we can see that there is plenty of room for the pair to make that decision. This means that BTC/USD could continue to trade sideways till the middle of December. 

Bitcoin (BTC) and the majority of cryptocurrencies are paired to the US Dollar (USD) on most exchanges which means that movements in the EUR/USD forex pair directly impact the cryptocurrency market. For now, the pair remains range bound between the 61.8% and the 38.2% fib extension levels. During this time, the cryptocurrency market could trade sideways with some altcoins making big gains. It still remains very risky to be trading altcoins at this point without confirmation of a bullish reversal. The market could easily decline below the descending channel although the probability of that happening at the moment is low considering there is “extreme fear” in the market according to the Fear and Greed Index.

The 4H chart for BTC/USD shows that the cryptocurrency made a strong move to the upside after a seemingly bearish candle. That candle soon turned from bearish to bullish around the 4H close and BTC/USD ended up printing another green candle afterwards. We can now spot what some would call an inverse head and shoulders on the 4H chart but it is important not to be overly bullish just yet. 

The focus here is on trapping in more bulls and inflicting more pain on the bears that are looking for easy shorts. This is why it makes more sense that we might see a series of moves to the upside aimed at shaking out the bears. However, they should not be confused with a bullish reversal. If there is a sustained rally to the upside that would be bullish but a few big bounces to the upside would be another opportunity to sell or short sell and not buy. Stochastic RSI on the 4H time frame is overbought at the moment which means that there is a high probability that this move to the upside has either run its course or is close to doing that.