Bitcoin cash price analysis - brief downwards price correction attempt
Bitcoin cash price failed to breach the resistance around 23.6% Fibonacci retracement during Tuesday's trading sessions. As per our technical analysis, bitcoin cash price will continue dropping towards $1,130, before an upwards trend become evident again.
Even though bitcoin cash price rose temporarily above the 23.6% Fibonacci retracement ($1,278.14) recording a daily high of $1,299 during Tuesday's trading sessions, the market's bulls failed to maintain the price above this important resistance level. After Tuesday's high was recorded, bitcoin cash price has been dropping steadily reaching $1,201 at the time of writing of this analysis. So, how low can we expect bitcoin cash price to go, before the market's bulls take the upper hand again?
Heading towards the support level around $1,130:Let's examine the 4 hour BCHUSD chart from Bitfinex, while plotting the 20 period SMA (red curve), the 50 period SMA (green curve), and the Bollinger Bands indicator. We also keep the Fibonacci retracements we plotted during Tuesday's bitcoin cash price analysis, as shown on the below chart. We can notice the following:
- Bitcoin cash price tested the resistance around $1,278.14, which corresponds to the 23.6% Fibonacci retracement, during Tuesday's trading sessions. However, the upwards momentum failed to maintain BCH's value above this level, and the price began plummeting after failing to break through this important resistance level. This was the second attempt to breach this resistance level, following the failed attempt that had taken place during last week's trading sessions.
- As shown on the above chart, $1,130 represents a significant support level beyond which price never dropped since the 23.6% Fibonacci retracement was tested on February 23rd. As such, the most logical scenario is to see bitcoin cash price drop down near $1,130, before the downwards trend is reversed and the price starts heading towards the North again.
- On Tuesday, bitcoin cash failed to rise above the 50 period SMA, which acted as a form of resistance level that prevented further rise in price. Right now, bitcoin cash price is below the 20 period SMA, as well as the 50 period SMA, which reflects that the downwards momentum will continue on controlling the market for some time. Also, the 20 period SMA is below the level of the 50 period SMA, which reflects that the market's bears have the upper hand and will mostly continue pulling price downwards to test the support level around $1,130.
- The brief upwards trend, which started last Monday, was reversed when candlesticks touched the upper Bollinger band during Tuesday's trading sessions. The 23.6% Fibonacci retracement also coincided with the level of the upper Bollinger band which added up to the strength of the resistance around the $1,278.14 price level.
- Bitcoin cash price will most probably drop down near $1,130, then the market's bulls will take the upper hand and push price upwards to test the resistance around the 23.6% Fibonacci retracement for the third time during the past 10 day period. Repeated testing of a resistance level weakens it, so this level will most probably be breached the next time it is tested.