Technical Analysis and Market Entry: Bitcoin Cash Regains Momentum Following Support from Big Buying Zone
- The Bitcoin Cash (BCH) price has recently taken a break from selling pressure; however, market bears may not be done yet.
- BCH/USD price action was moving within a bearish pennant structure, but the bulls appear to have defied the odds for now.
BCH/USD: Recent Price Behavior
The Bitcoin Cash price has recently managed to stage a near-term rebound, following the strong period of selling pressure which came into play late June. BCH/USD was saved by a critical area of demand seen from $260-$230, the lowest since 30th April. Upside momentum has come into play after being supported by the noted area for buyers. The price has been able to gain around 25%, since attracting some interest at these levels.
Market bulls, however, have been forced to slow down after running into a known daily resistance level at $326. At the time of writing, the buyers can be seen pushing the daily candlestick north of this; however, the daily closure above will be key.
Throughout April, buyers were capped by this area, failing to break above. It wasn’t until 11th May when BCH/USD saw an aggressive break out to the upside, smashing out from a bullish flag structure. In one initial move, the price gained some 30%, given the build-up of momentum and consolidation below the detailed resistance.
Bitcoin Cash went on to further grind north after completing the flag escape, eventually rallying to heights of $515 late in June. It was the highest the price had been since mid-November 2018, a time when BCH was in free-fall mode.
Given the strong nature of the bull run within such a short space of time, BCH/USD had run out of steam. The price tumbled around 50% from 26th June to 15th July, where it was finally caught by the earlier detailed demand zone.
Head and Shoulders
Price action via the daily chart view since April has been forming a potential head and shoulders structure. The left shoulder is part of April’s movements and the head through May to June. The fall from the latter stages of June to early July represented the price heading back down towards the neckline, $260-$230.
Should the bulls force, a daily closure above the earlier noted resistance, $326, then eyes would be on further upside. A retest with the following candlestick and the area serving as new support would then confirm upside bias. Targets would be $400 and $440, with stops placed at $312, leaving enough breathing room just below the $326 level.
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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