The price of Bitcoin (BTC) crashed hard today below the key $7,424 support where it consolidated before a massive pump that saw the price rise by more than 43% in just two days. This was a very important level that served as a strong support when the price recently broke past it after it had found a temporary bottom below $6,524. Many analysts still expect the price to rally towards $8,000 at this point and it may very well happen considering the falling wedge BTC/USD is trading in has to be broken at some point. However, it is very important not to be bullish until we have a clear break out of this falling wedge. So far, we have not seen that.
In fact, the opposite has just has happened as the price has not only faced a rejection at the top of the wedge but has now declined below key support levels. If the price fails to break out of the falling wedge any time soon, we might be looking at a decline back within the wedge which could mean a retest of the temporary bottom at $6,524 or at least a retest of the 50% fib retracement level at $6,587. This would be a massive blow to the optimism that we see right now in the market. However, that move could then be followed by a similar pump as the one mentioned before. This would get the bulls excited again before the beginning of another downtrend. Regardless of what happens near term, it is important to realize that BTC/USD could still shoot towards $8,000 even if it doesn’t do it this time.
The 4H chart for EUR/USD shows the forex pair bouncing off the 61.8% fib extension level. Despite the near term bearish outlook of Bitcoin (BTC), the near term outlook of this pair suggests that BTC/USD may not be ready to decline within the falling wedge just yet. Whether or not it can break out at this point remains to be seen but it is important to wait for confirmation before entering any aggressive trades. There has been a big move to the downside in BTC/USD today which has now been followed by a recovery attempt.
The most probable scenario is that Bitcoin (BTC) will end the day falling back to where it shot up from after the recent decline. This would be a price level of $7,234. Bitcoin (BTC) is expected to remain there till the beginning of the next trading day for EUR/USD i.e. Monday. This would be nothing surprising as recent moves in the market over the weekend have proved to be inconsequential. While the EUR/USD forex pair has traded between the 38.2% and the 61.8% fib extension levels for a while, the risk of the pair declining below the 61.8% is still there. We are likely to see the pair decline below this level sometime in the near future which is why traders and investors should take movements in this pair into account as it can be a good leading indicator of what happens next in the cryptocurrency market.