Bitcoin (BTC) has closed the day below the 21 Day EMA but we wanted to wait for further clarity to have a better idea of what is going to unfold here. The price has faced a clear rejection at the 38.2% fib retracement level from the local top. As long as the price remains below this level, there is no hope of any sustained move to the upside. If BTC/USD falls from here, the decline is likely to be very sharp and we will see it come down to $7,200 or lower levels before it can find temporary relief. There is little doubt that the rising wedge that we see in BTC/USD is eventually going to break to the downside and when that happens it is going to be too late to get out which is why large positions traders have already taken most of their profits and gotten out of the market by now.
Those that are still in the market expecting the price to go up to a new yearly high or a new all-time high are mostly retail traders that are looking for a miracle. Now, if we take a look at the daily chart for ETH/USD, we can see that it has already broken below the 38.2% fib extension from the December, 2018 lows even though Bitcoin (BTC) has not done that yet. This could mean that Ethereum (ETH) might be a better indicator of what is going on in the market. The daily chart also shows that the daily RSI for ETH/USD is in a strong downtrend. Moreover, the price keeps on visiting the 200 Day EMA which is a sign of weakness. In technical analysis, whenever the price keeps on visiting a level over and over again, the probability of that level being eventually broken becomes higher.
If we take a look at the rally in December, 2018 we can see that the price shot up quickly as it found a temporary bottom. However, this time the price keeps on testing the 200 Day EMA which means the bears could soon regain control if the price slides below the 200 Day EMA. Looking at CT, we can see that everyone is still overly optimistic. We recently conducted a poll on Crypto Daily which asked followers where they see BTC/USD finding its bottom before the beginning of the next cycle. 47% of the participants opted for the $7,500 to $6,000 range and 37% opted for $3,000-$1,200 with 11% opting for $6,000-$4,500 and only 5% opting for $4,500 to $3,000. This means that if the price ends up falling below $6,000 most of the people that are waiting for the bull run might lose all hope and start siding with the bears in anticipation of the worst to come.