Technical Analysis and Market Entry: Bitcoin Cash (BCH) Still Showing Strong Promise of Another Run Higher

  • Bitcoin Cash’s price has been under pressure from the sellers amid signs of profit-taking following the strong May-June run.
  • Despite losing ground, BCH/USD remains within a bullish technical structure.

BCH/USD: Recent Behavior

Bitcoin Cash’s price of late has been very much dictated by the bears, as it desperately tries to stabilize. The downside pressure comes after the bulls lost upside momentum following such a strong run which began at the back end of March.

BCH/USD has advanced some 300% from $128 up to $517 late in June, which was the highest price point since November 2018. The bulls were on a mission to recover the steep losses during the last two months of 2018.

There was much promise building for BCH from May-June, as price action had formed a bullish pennant structure. It looked like the bulls were capitalizing on the structure after seeing a breach between 22-26 June; however, this turned out to be a false breakout. The bears forced the price back within the pattern, failing to hold on a retest, and inviting a wave of selling pressure.

At the time of writing, price action is testing the lower supporting trend line to the downside. It does remain at risk of another sellers’ wave should it fail to hold.

BCH/USD daily chart.

Bullish Technical Set Up

Despite the losses encountered since the back-end of June, there is still some promise given the bullish pennant structure. The noted pattern is something that is seen with several of BCH’s peers, which showsigns of another potentially stronger bull run.

BCH/USD would have excited participants after breaking out from the pennant via the daily chart. The breach to the upside was seen on 22nd June, but proved to be unsustainable as the price fell back down within on 26th June. It appeared to be a false technical breakout, given its short-lived nature.

Given the pressure south still observed at the time of writing, the lower acting trend line is being penetrated by the market bears. The support preventing BCH/USD from losing the May-June bull run of gains provides reassurance for further upside to come. In proximity to the trend line is a big area of demand, the $375-$350 price range. The noted buying territory has been critical in keeping the price propped up during the most recent bull run.

Trade Recommendation

Should the pennant structure remain intact and not see BCH have a daily closure below, then upside is still eyed. In terms of target areas of interest, eyes should be on $600, where the price last traded in early November 2018, then $800.

Stops would be placed just below the pennant and demand zone at $347. If a breakout is seen from the pattern, then buys will be hunted within the area of the $375-$350 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.

Featured image courtesy of Shutterstock. Chart via CoinMarketCap. 

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.