Bitcoin Cash (BCH) at a crossroads: falling below $200 or rebounding
Date: 2023-08-04 Author: Karina Ziganova Categories: BLOCKCHAIN
The Bitcoin Cash (BCH) rate dropped after reaching a one-year high of $328. This decline pushed the price below the major horizontal resistance of $280
Despite this decline, the pattern on the daily timeframe suggests that a bottom will be reached soon and the price of BCH will eventually rebound to a new one-day high.
Bitcoin Cash remains under long-term resistance
As shown by the results of the technical analysis of the weekly chart, the price since May 2021 follows the descending resistance line. During this period, the minimum price of BCH reached $86, which is only slightly higher than the historical minimum of $81, noted in December 2018.
However, significant growth has been observed since then. In January 2023, the token finally broke the descending resistance line that had held it back for 609 days.
After the bullish breakout in June, the price made a short-term pullback to the levels that preceded the breakout, but after the formation of the bullish "double bottom" pattern (green icons) there was an energetic rebound. This pattern often leads to significant upward movements, which is what happened with BCH.
However, after reaching a new annual maximum of $329 in June, the token fell and is now trading below the $280 resistance area. A return to this area would represent a 26% gain, and a drop to the nearest $140 support would represent a 38% decline.
The weekly RSI supports the continuation of the growth of BCH. This momentum indicator is now above the 50 mark and is steadily growing, which is a sign of a bullish trend.
In addition, a bullish divergence (green line) was observed throughout the upward movement. This is an encouraging sign, which is usually associated with bullish trend reversals and reinforces confidence in further price increases.
Where is BCH bottoming out?
Meanwhile, the wave analysis of a shorter daily timeframe suggests a positive outlook for BCH, indicating a strong bullish trend.
According to the wave chart, BCH started a five-wave bullish structure, and the third wave was extended, which is quite typical for such growth. On July 18, the price bounced off the Fibonacci support level of 0.382 correction. Fibonacci levels are traditionally considered the most likely springboards for stopping and reversing the price after a significant advance in one direction, and they can determine the limit levels of the price movement.
However, yesterday the price fell below the Fibo support level. According to the concept of alternation, the fourth wave will most likely be sharp and fast, since the second wave was elongated.
If this wave analysis is correct, BCH is expected to complete the fourth wave near the Fibo 0.5 correction support level at $204.
After that, the token may complete the entire bull run in the $380-$400 range. This target range is represented by the 4.21 level of the expansion of the first wave and the 1.61 level of the external correction of the fourth wave.
In such a scenario, the price will rise by approximately 90% from the projected bottom at the level of $204. However, a drop below $204 would indicate that this analysis is incorrect. In this case, BCH can drop to at least $160.
Despite such a bullish forecast, the fall of BCH below the maximum of the first wave at the level of $156 will confirm the fallacy of this scenario. In this case, the token may drop to $100.
