Technical Analysis and Market Entry: BCH/USD Heading For A Big Retreat Ahead Of Committed Bull Run
- Bitcoin Cash price has run out of bull momentum, for now, set to give up four straight weeks of gains.
- BCH/USD subject to critical breached descending channel retest.
BCH/USD: Recent Price Behaviour
Bitcoin Cash price action has been the victim of some profit-taking, following the huge rally to the upside last week. The moves being a potential technical correction, given the gains in such a short space of time. It could very well be a way of the market, making way for some further upside pressure. BCH/USD did advance as much as 50% in the prior week. It was before the pice ran into a barrier of supply, within the $400 territory.
The push higher was at the time the biggest seen since May 2019; it was somewhat exacerbated by a critical pattern breakout. BCH/USD price action had been confined within a descending channel structure, via the weekly chart view. The breakout encouraged a stronger wave of buying pressure, given the duration BCH was contained for. It was moving within the structure from July 2019 up until early January.
Weekly Chart View
The price via the weekly chart view was enjoying a robust consecutive run to the north. BCH/USD is currently running at four straight weeks in the green, something that consistent has not been observed since May 2019. During this push higher seen, the price has been able to gain as much as 123%. However, with the recent cooling has given back some of these gains.
A technical rejection in proximity to the marked 38.2% Fibonacci, played a part in the move lower this week. Given the downside momentum, eyes will now be on a retest of the breached descending channel formation. The 61.8% Fibonacci is also noted just above the pattern, an additional confluence for the price to bounce here.
Daily Chart View
Price action via the daily chart view has breached a critical support area at $325. Further moves to the south do look increasingly probable now. Although, at the time of writing another daily support is seen at $307, which is at present holding the price. Should a breach occur, then as described above a retest of the channel will quickly come into play.
Buy positions would again be attractive once BCH/USD retreats down to $265-60 price area. A pullback of such described marks a retest of the descending channel, which is in proximity to the 61.8% Fibonacci. Entry would be sought once the price retests and successfully holds via the daily. Targets to the upside would then be eyed at; $350, $400 and then $500. Stops to be placed at $228.
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.
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