Technical Analysis and Market Entry: BCH/USD Forms Bearish Flag Structure

Bitcoin Cash
  • Bitcoin Cash rallies continue to be sold; vulnerabilities remain tilted to the downside. 
  • BCH/USD price action has formed a bearish flag structure, subject to an extended move to the downside. 

BCH/USD: Recent Price Behaviour 

Bitcoin Cash price is firmly within the control of the market bears, despite the minor near-term upside seen. It was very much a near-term and short-lived technical pullback, which continues to remain vulnerable to being sold. The price has firmly been on the decline for five weeks, not showing much sign of a convincing recovery. During the noted period, it has seen BCH/USD drop as much as 70%. 

The price fell from heights of $500 down to $120; it had achieved the highest levels since June 2019. Recently BCH dropped back down to December 2019 lows. Bitcoin Cash has completely paired the gains and promising-looking recovery that had been set out from the start for 2020. It hit somewhat of a double top formation, with the price flirting around the neckline area of the $160-170 range. 

Weekly Chart View 

In terms of the weekly performance, it is the worst run to the south seen since November – December 2018. Given the current loss of upside momentum, it further confirms that the market is unable to sustain a bull run. However, there are fundamental factors this time around, due to the current global Coronavirus fears. 

BCH/USD has been forced back to trading within a descending channel structure. The price had initially made a breakout from this in January, however now falling back within. The noted pattern had been in play from July after the bears reignited their pressure to the south. Critical weekly support should be noted at $140, where the descending trend line of the channel is tracking. 

BCH/USD weekly chart.

Daily Chart View

Price action via the daily chart view has formed a bearish flag structure, which is increasingly subject to breakout to the south. The formation of this has been in play since 13 March, as BCH is consolidating for the time being following the deep selling earlier in the month. Its trading range is narrowing, which suggests an imminent breach. 

BCH/USD daily chart.

Trade Recommendation 

Given the above described bearish technical structure, deeper moves to the downside are attractive. An entry would be desirable around the current market price—targets to the south at; $155, $100 and then $75. Stops to be placed above the flag at $280, leaving enough breathing room.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.