Bitcoin cash price analysis - heading towards $1,300
Bitcoin cash price broke out of the ascending triangle pattern in a downwards direction and will most probably continue on dropping to test the support level around $1,194.30 (38.2% Fibonacci retracement). As per our technical analysis, the downwards trend will most probably be reversed and bitcoin cash will start rising towards $1,300 during the next 24 hours or so.
After breaking out of the ascending triangle pattern, bitcoin cash price has been witnessing a relatively steep price drop as we expected during our BCH analysis on February 6th. The market's bears pulled price downwards from Monday's high of $1,294 to $1,209 during Tuesday's trading sessions, as this article is being written. As the price approaches the 50% Fibonacci retracement ($1,194.30), the bearish market momentum is getting weaker. So, how low can bitcoin cash price go before the market's bulls can take the upper hand? Can we expect BCH price to start rising during the upcoming 24 hours?
Heading towards the 50% Fibonacci retracement around $1,194.30:Let's study the 2 hour BCHUSD chart from Bitfinex, while plotting the 50 period SMA, the Bollinger Bands indicator, and the Stochastic oscillator, as shown on the below chart. We will also plot Fibonacci retracements extending between a high of $1,630 and a low of $758.61. We can note the following:
- Bitcoin cash price dropped below the lower border (the rising support level) of the ascending triangle pattern during Monday, which ignited a steep downwards trend taking price to a level lower than the low recorded last Sunday ($1,220). This was expected due to the fact that a breakout of an ascending triangle pattern usually occurs in a downwards direction. The downwards trend became more prominent when bitcoin cash price dropped below the level of the 50 period SMA.
- The next significant support level lies around $1,194.30, which corresponds to the 50% Fibonacci retracement. As such, BCH price will most probably drop down to this level, which will mark reversal of the downtrend and the beginning of a new bullish wave. The strength of this support level can be evidenced by how it prevented further price drop on March 1st. We can expect the same scenario to occur during the next 24 hours.
- The strength of the bearish wave is weakening as bitcoin cash price is approaching the level of the 50% Fibonacci retracement. This is evidenced by the formation of candlesticks near the level of the lower Bollinger band, so BCH is somehow oversold at the current price. Consequently, the downtrend will most probably be reversed soon and bitcoin cash price will start rising, so that candlesticks can get closer to the middle Bollinger band, where the market would be more stable.
- The Stochastic oscillator is currently way below 20, as it values around 3 at the time of writing of this analysis. This means that BCH is oversold as per the current market price, so a bullish move is very likely to occur after testing the support level around $1,194.30. The bullish wave is expected to push bitcoin cash price upwards to test the resistance $1,297.13, which corresponds to the 38.2% Fibonacci retracement, within the next 24 hours or so.