Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice
Since November 9, Bitcoin Cash (BCH) has fallen sharply in a down-channel (white). For the most part, the 20 SMA (red, Bollinger Bands average) stood as a solid resistance until the bulls flipped it to support after breaking out of the pattern.
From here on, the alt had to hold a close above the $354 resistance to confirm a possible uptrend in the coming days. As buyers build pressure to snap the 50 EMA (cyan), any close below the 20 SMA would indicate a false breakout.
As of going to press, BCH was trading at $328.3.
Bitcoin Cash Daily Chart
The alt has lost more than 64% of its value in the past 11 weeks, reaching its 13-month low on Jan. 24. The bulls eventually halted the aggressive downturn by emerging near the $275 mark 14-month support. With a ROI of 32.4% from this level, BCH finally broke out of the pattern and tested the 50 EMA (cyan).
Since then, the channel’s lower trendline and the 20 SMA have taken immediate support. The 20 SMA is also in an uptrend, confirming mounting bullish pressure.
With the Bollinger Bands entering a tight phase, the alt could hover near its 20 SMA for a while before challenging the $354 resistance. Could this be the start of an uptrend? Besides, any close below the $310 zone would eschew any possibility of a trend reversal.
The RSI saw a bearish divergence with its price as it struggled to float itself above the midline. So a pullback to the $311 mark should come as no surprise to the investors/traders.
Interestingly, the MACD histogram entered a tight phase. So if the buyers continue to build their pressure above the 20 SMA, there is a good chance that they will cross the $354 level in the coming days.
Given the bearish divergence, BCH could see a setback to its 20 SMA before picking up and challenging the $354 level. Readings on its Bollinger Bands and MACD histogram keep hopes of a possible trend change alive.
That said, BCH shares a 79% 30-day correlation with the king coin. So keeping an eye on Bitcoin’s movement would be vital in making the right decision.
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