Bitcoin made an impressive move to be upside once again yesterday but we saw that it was short-lived and the price started to crash soon after. We are now seeing BTC/USD struggling to break past the 61.8% fib level at $7,162 but it seems to be having a really hard time doing that and if the price keeps on trading below this level then the probability of a fall below $7,000 or eventually lower than that would increase drastically. However, at this point a lot of traders are expecting the price to decline further because there is obvious weakness in the price action and it tells me that maybe we could see another dead cat bounce to the upside and that would also be the perfect liquidity hunt that would shake out a lot more retail bears once again and trap in more retail bulls that are hoping for the price to shoot up towards $8,000 and higher.
Throughout the trading history of Bitcoin we have seen such pumps and we have seen a lot of retail traders being shaken out by these moves and it will continue to happen in the future but at this point you know the stakes are too high for the market makers and now that the price is ready to decline below $7,000 and everyone knows that it is going to happen at some point they can’t just let everyone short the market and ride the wave down. They’re going to want to keep on shaking out retail traders at every opportunity that that they can get and at this point it seems like this is a good opportunity for the market makers to shake out some retail bears again now that we have seen the price continue to trade above the $7,138 level which is a strong support level and the price is going to have a very hard time falling below this level.
The market is primed to crash hard long-term but short-term we could see misleading moves that would shake out a lot of these overzealous traders and then the price would end up doing what it was supposed to do anyway. If we look at look at the ETH/USD chart, we can see that it shares a similar outlook as Bitcoin. The price has now faced a strong rejection at the 38.2% level which corresponds to the $128.95 level and it is going to have a hard time breaking past this level. Until and unless we have a clear break past this level with a continued rally to the upside, we have no reason to be bullish just yet. Taking a look at the S&P 500 (SPX) we can see that the index has shot past the 1.272 fib retracement level and could now test the 1.618 level. I don’t expect the index to shoot up to go to that level. I think we are more likely to see a correction before it happens and that correction is expected to coincide with President Trump’s impeachment trial in the Senate which I think is going to have a major impact not only on the stock market but emerging markets as well including the cryptocurrency market.