Technical Analysis and Market Entry: Bitcoin Cash (BCH) Lays Foundation for Near-Term Recovery
- The Bitcoin Cash price has been stabilizing since the back end of August, following the heavy selling from late June.
- BCH/USD bulls have managed to defy the odds of a bearish pennant structure, forcing a daily break and closure above.
BCH/USD: Recent Price Behavior
The Bitcoin Cash price has managed to stage a rebound after bottoming out at the back-end of August. It had been under heavy selling pressure since the latter stages of June, having dropped as much as 47%. A known demand area caught the free-falling price, which runs from $270 to $235.
At the back end of April, BCH/USD found strong buying momentum from the above-noted demand area. The price went on to rally to the highest level seen since November 2018 at $515. BCH has since struggled to convincingly find its feet, the last time between 14 July-14 August. The price, however, within the noted period, formed a bearish ascending wedge structure.
Bulls to Use Pennant As LaunchPad
Following the breakout of the detailed wedge, BCH/USD went into further consolidation. It has formed a bearish pennant pattern, from 15 August-6 September. The market bulls, however, did defy the odds of the structure, forcing a breakout to the upside on 7 September. At the time of writing, the price is trading above the pennant and using it as new support.
Should the price manage to see another daily closure above, then a further wave of buying pressure will be eyed. The bulls have the opportunity to launch off the pattern, with the upper acting trend line as new support. It can be seen tracking at $295, preventing the price from being sucked back within the control of the bulls.
Given the solid technical development from the market bulls, eyes are on a continued recovery for Bitcoin Cash. The support of the earlier detailed critical demand zone, allied with the break above the pennant, present two solid confluences for further upside. In terms of targets; $355, $380 and then $400 are eyed. Stops would be placed below the pennant at $270.
On the other hand, if the bulls fail to capitalize on the bearish structure escape, then the next bear move could be very punishing. A breach of the critical demand area, $270-$235, would open the door to strong selling. The next area of support is not seen until the 2018 bottom area, down at $115-$75 price range.
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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