Bitcoin cash has rallied more than 96 percent from recent lows, but still remains trapped in a bearish pattern, the technical charts indicate.
As of writing, bitcoin cash (BCH) is trading at $1,500, as per data source Coinmarketcap. The world’s fourth-largest cryptocurrency by market capitalization has appreciated by 11 percent in the last 24 hours, making it the biggest gainer among the top 10 cryptocurrencies.
The sharp recovery from the Feb. 6 low of $764 is pretty much in line with the uptick seen in the broader markets in the last 10 days. That said, BCH has outperformed other crypto market leaders over that period, except for litecoin, which is up close to 110 percent from Feb. 6 lows.
The rally is backed by good news on the fundamentals front. For instance, decentralized marketplace OpenBazaar and crypto payments firm BitPay have both added support for BCH in recent weeks.
That said, BCH bulls need to overcome a couple of critical resistance levels before claiming victory over the bears.
- The high volume inverse head-and-shoulders breakout signals a bearish-to-bullish trend change and has opened the doors for a rally to $2,100 (target as per the measured height method).
- However, the gains are capped by the neckline resistance (former support) of the head-and-shoulders bearish reversal seen on the daily chart below.
- Neckline resistance is seen at $1,533 and is capping gains in BCH.
- BCH is still trapped inside the falling channel (marked by lower highs and lower lows), meaning the overall outlook still remains bearish.
- The 50-day moving average (MA) and 100-day MA will likely see a bearish crossover (50-day MA cuts 100-day MA from above, indicating a bearish bias).
- On the other hand, the relative strength index (RSI), 5-day MA and 10-day MA are trending higher in favor of the bulls.
- A daily close (as per UTC) above $1,756 would signal an upside break of the falling channel, adding credence to inverse head-and-shoulders breakout (seen in the 4-hour chart), and could yield a sustained rally to $2,000.
- The bullish daily RSI and 5-day MA, 10-day MA indicate BCH will likely rise above resistance at $1,533 (head-and-shoulders neckline) and move towards $1,756 over the next few days.
- However, if BCH fails to take out $1,533 and closes (as per UTC) below $1,100, then the outlook would turn bearish.