Bitcoin (BTC) is about to enter overbought territory on the daily time frame but there is still room for an aggressive rally to the upside short term. As frequently mentioned in our previous analyses, Bitcoin (BTC) will have to retest previous market structure sooner or later. This is the best time to do that considering Bitcoin (BTC) is close to topping out short term but there is room for a rally towards $6,000. This is speaking about Bitcoin (BTC) independently but as we have seen in the past, Bitcoin (BTC) looks up to bigger markets at critical points. If EUR/USD had started a recovery instead of continuing to decline around July, 2018, we would have seen Bitcoin (BTC) do the same.

Just as the EURO showed signs of a false recovery before the fall towards its true bottom, BTC/USD also gave investors false hope around July, 2018. This is because Bitcoin (BTC) is paired to the US Dollar (USD) on most exchanges across the globe. If EUR/USD goes up, this means that the Dollar (USD) goes down and when the Dollar (USD) goes down, the price of Bitcoin (BTC) goes up. The exact same thing is happening today. The positive movement in the price of Bitcoin (BTC) and other cryptocurrencies we have seen over the past 24 hours has more to do with EUR/USD than the cryptocurrency market. If we look at the BTC/USD chart, we see a yearlong bear market which if followed by patterns of the past should see Bitcoin (BTC) trading sideways for a long time before any hopes of a recovery.

However, we have reason to believe that Bitcoin (BTC) might surprise us this time. To find out why, let us go to January 2017 on the EUR/USD weekly chart. We can see that the EURO just reached the bottom of an ascending channel and was consolidating before its next move up. This is 2017 we are talking about, the year when Bitcoin (BTC) as well as most other cryptocurrencies were preparing for their most aggressive rally since the bear market of 2014-15. Soon as EUR/USD climbed atop the 21 Week EMA, the EURO skyrocketed in the weeks ahead and so did Bitcoin (BTC) and the rest of the cryptocurrencies as the US Dollar (USD) was falling.

Now, if we look at the monthly chart for BTC/USD, we would think that no way something like this is going to happen again this soon. The price of Bitcoin (BTC) took almost three years to begin the next bullish cycle after the last bear market. So, by that analysis this time we should also expect the price to rally aggressively somewhere in 2021, right? Well, we would yes if the EUR/USD outlook was the same. However, things seem to be quite different this time and for all the right reasons. The global economy is in shambles and there are debates about collapse of the petro dollar every other day. The next crisis is not going to be just a stock market crisis; it is also going to be a major currency crisis.

If we look at the EUR/USD weekly chart again, we can clearly see that the price is close to doing the exact same thing it did in April, 2017. You can see what happened to EUR/USD after April, 2017 when it climbed atop the 21 Week EMA. You can also look at the BTC/USD chart after April, 2017 and see that the price began to rally aggressively until it topped out around $20,000. Now, here is the thing. EUR/USD could do something out of the ordinary but the most probable scenario is that it will continue to trade in this ascending channel and climb atop the 21 Week EMA in the weeks ahead to begin its bull trend. When that happens, you can bet your boots that Bitcoin (BTC) will follow.