Bitcoin Bulls Can Still Take Control

Bitcoin declined below $7,000 and it appears to be bearish on surface but I think the market could rally higher from here. The price has just found support on the 61.8% fib extension level and as we can see it has already started to move up. If BTC/USD ends up rallying higher from here, then the probability of a move towards higher levels in the near future would increase significantly. The recent crash is a lot similar to what we have seen before. The price crashed in one big candle which was then followed by a reversal attempt which failed and then further downside. After that it started to recover temporarily just like it has now. 

The point is, while everyone is expecting the price to decline straight to $5,500 from current levels, it may not happen that easily. We could see the market continue to play retail bears that are hoping for a sharp decline from current levels. Meanwhile, it is in the interest of the market makers and whales to trap in more bulls and inflict more pain on the bears before the next major decline. The ETH/USD chart shares a similar outlook as Bitcoin (BTC) and we have now seen the price begin to rally aggressively from the $141 mark converting a bearish 4H candle into a bullish one. The EUR/USD forex pair indicates that the is still room for the market to make its next big decision which means that the bulls could take control short term and push the market higher from current levels. 

The majority of retail traders remain fearful as indicated by “extreme fear” on the Fear and Greed Index. The index is currently down by another point from yesterday and is currently at 20. We have seen the market reverse short term most of the time whenever the sentiment has declined this low. However, traders should remain cautious. Although there is no reason to be overly bearish just yet, there is no reason to be overly bullish either. We can spot what looks like an IH&S formation the 4H chart for BTC/USD but it is important not to lay too much emphasis on this as we remain in a strong bear trend and Bitcoin (BTC) just closed last week below the 100 Week EMA with no significant signs of any bullish recovery just yet.

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