Technical Analysis and Market Entry: Bitcoin Cash Breaks and Retest Bearish Pennant Structure

Bitcoin Cash
  • Bitcoin Cash is running towards its fifth consecutive week in the green, as the price remains on the path to recovery.
  • BCH/USD price action is retesting a breached bearish pennant structure via the daily.

BCH/USD: Recent Price Behaviour

The Bitcoin Cash price has been on a decent path to recovery, following the heavy beating encountered between June to September. BCH had dropped a chunky of some 60% towards the latter stages of June, falling from heights of $500 plus. The price was trading at its most elevated seen since November 2018, producing such an impressive recovery. 

BCH/USD at the start of 2019 was trading down as low as $110, following the bottoming in December 2018. The price managed to stabilize, and then not long after decent momentum came into play via the bulls. Weekly gains were proving to be very much consecutive, with a lack of slowdown. The run higher was demonstrating similar qualities to that of 2017.

The price has since struggled to find any sustainable upside; rallies do remain vulnerable to being sold. Outside of the noted price behaviour, things have also proven to be range-bound. There has been a lack of committed direction, which has been the case since the summer drop.

BCH/USD daily chart.

Pennant Breakout and Retest

Price action via the daily view was moving within a bearish pennant pattern, between mid-July up until late September. The sellers managed to force a breach of the lower acting trend line, inviting a fresh wave of selling pressure to come into play. BCH/USD was a victim of testing $200 to the downside, before managing to stabilize within a known demand zone.

A retest and rejection have so far been observed on 30 October; the daily candle even formed a bearish evening star. These two technical developments are enough to suggest another move to the downside unless the bulls can defy the odds of the setup, which would need a daily closure back above the pennant.

Trade Recommendation

Deeper moves to the south appear to be attractive from the current market price. Downside targets would be; $215, $200 and then $150. Stops to be placed above the pennant structure at $340.

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.