Technical Analysis and Market Entry: Bitcoin Cash (BCH) Could Double Very Quickly

  • The Bitcoin Cash (BCH) price has gained as much as 30% over the past two sessions, as a strong surge of life comes back into the bulls.
  • BCH/USD broke out from a bullish flag structure, which invited a wave of buying pressure.

The Bitcoin Cash price has been well within the control of the market bulls, enjoying a strong run to the upside. BCH recently jumping to its highest level since November 2018, the most significant two-day gain observed since 2nd April. The followed the bullish momentum at the start of April, which was quickly given up after touching a critical supply area.

The above-noted rejection saw BCH/USD enter consolidation mode, very gradually cooling south away from the high area of the month. During the easing period, price action formed a bullish flag structure, which was subject to a breakout, if playing to the textbook. The bulls managed to force a breach, which invited a surge of buyers, exacerbating the move higher.

Heavy Supply Zone: Trend Defining

BCH/USD has been able to gain as much as 30% over the last two sessions. The price however has once again been limited by a strong zone of supply. It can be observed running from $365, where the price peaked from the April bull run, up to $410. BCH has not traded comfortably above this area since mid-November 2018.

At the time of writing, BCH/USD is seen trading around the entry point of the above-detailed zone. Should the price maintain the current course of upside momentum, this could see the bulls gradually breaking down the supply. If the bulls can start stabilizing within the tricky area, then this could be capitalized on in no time, inviting a new wave of buying.

BCH/USD daily chart.

Bullish Flag Retest

Given the slowdown within the noted barrier area, $365-$410, there may be room for a pullback and retest of the breached bullish flag structure. If playing out to the textbook, naturally the price would come back down to the top of the flag, completing a breakout and retest. The upper acting trend line of the pattern is tracking around $280, further buying would be technically down at this area.

Trade Recommendation

Should BCH/USD complete the pullback, eyes will then be on entries for buys, around the $300-$280 area. The retest on the daily, with a hold and close above, would confirm longs. In terms of upside targets, eyes will again be on $365, the barrier entry point to the large supply zone. Further north, $410, the upper part of the supply range, is the next target. As mentioned earlier the BCH has not been comfortable above this level since 15th November 2018.

A break down of the $365-$410 zone could see a quick return up towards $600 and beyond. BCH/USD would be recovering the deep fall encountered in November 2018. $560-$600 would be of interest and then $650, where the price last traded in on 7th November. In terms of stops upon the completed pattern retest, these to be placed just below the structure at $211.

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.

 

Author:
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.