Technical Analysis and Market Entry: Bitcoin Cash (BCH) Has Broken Two Critical Areas of Support
- Bitcoin Cash bulls are attempting to break out of a bearish technical structure, as the price runs towards its second consecutive session in the green.
- BCH/USD price action over the last five sessions had formed a pennant structure, which was set up for sellers to capitalize on.
BCH/USD: Recent Price Behavior
Bitcoin Cash is running towards its second session in the green, as the price looks to make a near-term attempt out of the bearish trend. The price had been consolidating for the last five sessions, following a steep fall between 20-24 September. BCH/USD dropped a whopping 36% within the noted period, falling from heights of $324, down to the recent low at $202. The price is trading at the lowest levels that have been seen since April.
The market bears have been in firm control of Bitcoin Cash for going on fifteen weeks now. The trend remains strongly to the downside, with a lack of signage in that changing anytime soon. Any rallies that are seen from the bulls prove to be short-lived, a brief consolidation period ahead of further selling. BCH/USD had fallen as much as 60% since June when the selling pressure came into play.
Critical Ascending Trend Line Breach
BCH/USD price action was being supported to the upside by a long-running ascending trend line. It had been in play since December 2018, when the price had bottomed out down at the lows of $77. The bears, however, did manage to force a breakout and weekly closure below this noted support. The candlestick this week has already tapped underneath the trend line and so far been rejected. Should the retest and rejection be confirmed, resulting in the bulls not pushing back above, it could prove to be very punishing.
It should be noted that the resistance of the trend line is tracking around $240. The bulls do have a large task on their hands; there is also a strong area of supply in proximity. The zone runs from $235 up to $270. In terms of the last week’s drop, it has left some large vulnerabilities to further downside pressure.
Given the above described technical advantage in favour of the bears, shorts do remain attractive. Targets to the south would be; $200, $150 and then $100. Entries would be around the current market price, with stops above the acting trend line of resistance $250. In order for the bias to be shifted, the price will need to see a weekly closure above the breached long-running support.
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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