Bitcoin (BTC) has shot up to make more than a 10% move in just a few hours. This is a big move but those that have been looking at the bigger picture would know that this is nothing significant. In fact, the price was expected to do this after it broke below the trend line support at the beginning of this month. Now, the trend line support has turned into trend line resistance and the price has just tested it. Until and unless BTC/USD breaks above this trend line, this is nothing significant because there are a lot of other things that are much more significant. If we take a look at the monthly chart for Brave New Coin Liquid Index for Bitcoin, we can see that the index has yet to break past the very strong trend line support turned resistance.
A break above that trend line resistance is a lot more significant than the rally we have seen so far. This is because that trend line served as support since 2011 till it was broken in November, 2018. It is unfortunate how most cryptocurrency traders choose to ignore that altogether and lay too much emphasis on this recent parabolic run up. We have seen the price make parabolic moves before but we had never seen it break a critical trend line support until November of last year. Until the price climbs above that trend line, there is no reason at all to be bullish. If we take a look at Coinmarketcap, we can see that most cryptocurrencies are down in Bitcoin (BTC) terms. BTC/USD has been leading rallies for a while now which has left a lot of altcoin investors very frustrated.
We have mentioned in our previous analyses on Bitcoin (BTC) that it is never about Bitcoin (BTC) alone because Bitcoin (BTC) is not a standalone asset immune to the effects of larger markets. Bitcoin (BTC) dances to the moves of larger markets like the stock market or forex market. One significant asset that it dances to is the EUR/USD forex pair. If we take a look at the weekly chart for EUR/USD, we can see that it is trading below the 50 week EMA after facing a rejection at a strong horizontal resistance. This is a strong resistance which coupled with the 50 Week EMA would be very hard to breach. If we take a look at the Fear and Greed Index, it is at 95, which is incredible. So, if this is not a sign to expect a bearish reversal in the days ahead, I don’t know what is.