Trade Recommendation: Bitcoin Cash
Bitcoin Cash has been on the receiving end of the bears. From its highs of $4139.0893 on December 20, the cryptocurrency plunged about 81% by February 06. This shows the kind of damage the decline has done to the buy and hold investors.
- Bottom fishing is seen in Bitcoin Cash.
- It is likely to change its trend from down to range bound.
- Buy $1,400, SL $1,100, target $1,896 and $2,070
However, smart investors start cherry picking when others sell in a panic. We believe that Bitcoin Cash is showing signs of bottoming out, hence, is worthy of a buy.
In the short-term, Bitcoin Cash is trading inside the descending channel. In the long-term, the cryptocurrency has a stiff resistance at the downtrend line. Additionally, it has stayed below the 20-day EMA since January 16. All these point to a strong downtrend.
However, the bears could not build up on the breakdown of the critical support at $854. Though prices fell to a low of $778.2021 on February 06, it quickly rebounded about 79% to $1392.5405 on February 10.
Since then, the virtual currency has been trading inside a tight range. This is unlikely to continue for long. We expect a large range move to the upside that will propel the BCH/USD pair above the critical resistance zone, which has a confluence of resistance from the 20-day EMA, the downtrend line and the resistance line of the descending channel.
Once above this zone, a rally to the 50-day SMA of $1,896 and above it to $2,070 is likely.
Therefore, we suggest initiating long positions on a breakout above $1,400. The stop loss for the trade should be kept at the recent lows of $1,100. Traders should avoid purchasing below the specified levels.
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