Bitcoin surprised everyone once again as the price shot up past key resistance levels and touched $7,452 before declining sharply from there. In doing that, BTC/USD finally tested the 200 moving average. We have long been talking about a retest of the 200 moving average on the 4H time frame before the next decline. Now that the price has faced a strong rejection at that level, it is likely to decline further. Please note that it may still see further upside after declining to lower levels within the falling wedge. We could see an even more bullish move follow after the price declines to the bottom of the falling wedge but for now this rally seems to have run its course.
It is not even reasonable to term this as a rally because this is essentially a pump or a bounce. Such moves during a bear trend are an opportunity to sell and short sell but traders need to be careful because these moves could get extended in event of a short squeeze. We saw during the last pump that BTC/USD shot up 43% before declining more than 30%. It would have been a very good opportunity to short sell but as we saw very few people benefitted from that move and the vast majority of retail traders ended up losing money when they shorted the market too early. A good indicator of such bounces is when we see BTC/USD rise more aggressively compared to altcoin pairs like ETH/USD. That is when you can tell that something is off and a manipulated pump/bounce is in the making.
The EUR/USD forex pair has finally started its downtrend. There is now a good chance that we might end up seeing a sharp decline that could drag the cryptocurrency market down with it. The long term correlation between BTC/USD and EUR/USD is well defined and has been proven time and time again. The rest move in the cryptocurrency market has made traders bullish once again but this could be a dangerous trap. The market reacted positively to President Trump’s impeachment vote. We saw some risk taking return to the market. The stock market is expected to continue to rally as the house vote is done with now but volatility could spike up again around January to February of next year during the senate trial. It may also be the time to expect something decisive in the stock market and therefore in Bitcoin (BTC) and the rest of the cryptocurrency market.
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