Bitcoin has finally declined down to the 1.272 fib extension level from the top of the descending channel. While many traders are still expecting it to go down further, we are seeing some bullish strength develop that could potentially push the price towards the 61.8% fib retracement level around $8,700 in the weeks ahead. It is very important to note that BTC/USD has now declined to the bottom of the descending channel. Although it broke below the channel at one point when the price closed below the 100 Week EMA, it has now climbed back up.
The fact that the price closed below the 100 Week EMA is alarming and therefore it is important not to be greedy here even though many traders are fearful. We could still see a decline towards $6,000 and if that happens, it may decline much lower than that down to the 61.8% fib extension level from the yearly high to decline down to $5.5k or much lower. Even though the probability of that happening without some sort of short term upside is low, it is still a possibility that needs to be taken into consideration quite seriously because we are still in a bear trend. The ETH/USD chart is a lot more clear in that regard as it shows how much room the price has to decline further within its descending channel in case of another downtrend.
The EUR/USD forex pair has now started to move up after significant downside. We could see the pair trade range bound between the 38.2% and the 61.8% for a few weeks before the next decisive move. This might lead to similar movement in Bitcoin (BTC). It could therefore be a time when BTC/USD might trade sideways but altcoins could rally once again. Ethereum dominance (ETH.D) is now ready to break past the 38.2% fib extension level. If it rallies past this level and finds support on it that would be a sign to be bullish on altcoins with effective risk management. The S&P 500 (SPX) also remains strong and the Fear and Greed Index has declined further in the “extreme fear” territory. There might therefore be bullish opportunities around to capitalize on but until Bitcoin dominance (BTC.D) tests the 200 EMA on the 4H time frame and faces a rejection, any bullish opportunities would be high risk and prone to sudden changes.