The changing outlook of the EUR/USD forex pair is bad news for Bitcoin (BTC). The 4H chart for EUR/USD shows that the pair could decline below the rising wedge back into the falling wedge. If that happens, we are very likely to see a sharp decline in the cryptocurrency market as well because the EUR/USD forex pair makes up for most of the Dollar Index (DXY). A decline in EUR/USD means a rise in the strength of the US Dollar and therefore a decline in the prices of cryptocurrencies in dollar terms. The S&P 500 (SPX) might also be at a point of a potential trend reversal. The last time the index declined we saw the cryptocurrency market crash hard as BTC/USD broke market structure and plunged below $6,000.

A sharp decline in this currency pair below the trend line support might be the trigger we are looking at for the cryptocurrency market to begin its next downtrend. Bitcoin (BTC) recently pumped hard that got a lot of traders all excited again but that was a desperate move to shake out the bears and trap in more bulls before the real events unfold in the near future. The cryptocurrency market is on the verge of an inevitable decline. Such moves might delay the inevitable or even discourage some players from shorting the market but that does not change what is expected to happen. The recent pump had the desired effect because many traders seem to be overly bullish on Bitcoin (BTC) at this point including some widely followed and reputed analysts.

At every point in a market, some traders are bullish and some are bearish given how they see things. You could be short term bullish or bearish on the market but it is beyond my comprehension how anyone looking at this chart could be bullish because of this recent pump. The daily chart for BTC/USD clearly shows the price trading within a descending channel. We can celebrate how the price managed to pump past the 200 day EMA and stayed above it but that does not change anything until we see a break out of this descending channel.

The thing is, pumping the price to push it price certain levels that everyone is looking at might not be hard to achieve short term, but trying to invalidate a long term trend like the downtrend that we see the price in trading within the descending channel, that is not something you could change with such pumps. It is therefore very important to at least wait even if you are not convinced that the price is headed lower from here because there will always be more opportunities. You can go back and look at the price action and see for yourself that there are always opportunities to short and long the market which is why there is no reason for any rush. Worst case scenario you might miss out on a 5% or even a 10% gain but that might save you from a potential 40% or more decline.