Technical Analysis and Market Entry: Bitcoin Cash (BCH) – Big Pullback and Potential Buy Opportunity
- Bitcoin Cash (BCH) has recently fallen victim to some heavy profit-taking, following such a strong bull run.
- BCH/USD is having some difficulty breakdown a significant area of supply, $365-$410.
BCH/USD: Recent Price Behaviour
The Bitcoin Cash price has been facing some difficulty over the past two sessions, failing to firmly break down and clear the big supply area. BCH/USD has given up as much as 25% within the noted period, and is attempting to stabilize again.
The selling pressure observed appears to be some profit-taking or correction ahead of further moves north. Besides, the bulls did manage to push for gains of over 50%, from 11th May to 16th May, jumping to the highest level since 14th November 2018.
Bullish Flag Structure
Initially, BCH/USD was moving within a bullish flag pattern structure, observed from 3rd April up until 10th May. The market bulls forced a significant breakout to the upside on 11th May, seeing a significant surge of momentum north.
It appears price action will play out to the textbook with the breakout and retest of the bull flag. At the time of writing, BCH can be seen cooling down towards the upper acting trend line of the structure. Touch and hold of the flag could provide another confirmation for the market bulls.
Significant Barrier ahead of Heavenly Heights
During the most recent run higher, BCH/USD had been magnetized around a huge supply barrier. It can be seen tracking from $365 up to $410; the price has not comfortably traded above this region since 13th November 2018.
Should the Bitcoin Cash bulls manage to force a break and closure above, it could open the door to some intense buying pressure. Looking to the upside, the door would be unlocked for a return back up to the $600-650 territory.
A move, as described above, would see BCH/USD returning to the pre-November fall price area. The price had been trading up at these heights before the massive bear market kicked in. Bitcoin Cash dropped a whopping 87% to produce a bottom late in December 2018 down at $73.50.
The next committed move is very much dependent on how BCH/USD responds within the noted region ($365-$410). At present, Bitcoin Cash is using this zone as support, preventing a complete free-fall.
Should the current daily candlestick fail to hold as described above, eyes will be on a pullback to retest the flag structure. A move down to around $288 would be watched to then see if the support provides the needed comfort.
A buy position upon the retest would be attractive, with targets at $550, $600 and $650. Stops being placed just below the flag structure at $195. Additional support is seen just below, a demand zone running from $250-$205.
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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