The bitcoin cash rally is back on.
At press time, the bitcoin cash-U.S. dollar (BCH/USD) exchange rate hit a four-day high of $505.90 on the day's trading, before dipping lower to $487.47. As per CoinMarketCap, the cryptocurrency has witnessed a 9 percent gain in value over the last 24 hours.
Possibly driving the rally, Bitcoin ABC – the most widely used version of the bitcoin cash software – released upgrade 0.16.0 today, with changes to come into effect via a hard fork on Nov. 13. Meant to ease economic concerns with its mining network, the code was announced yesterday to a mixed reaction from investors and enthusiasts.
But though the news is positive, a clear link cannot be established between the software upgrade and today's climb in price. Similarly, the cryptocurrency lost its mojo earlier this week, as investors appeared to assess if the upcoming technical upgrade would lead to a split of the blockchain (and separate competing currencies).
Those fears still persist, although the consensus seems to be building among investors that a chain split is unlikely and that participants only need to upgrade the software.
Meanwhile, as per CoinMarketCap, the cryptocurrency's price might also be being pumped by Korean trading desks. Volumes on Bithumb (BCH/KRW), one of the largest exchanges in South Korea, are up 47.83 percent.
So is BCH set to extend the rally? Price action analysis indicates the potential for solid gains.
The above chart shows:
- Rounding bottom
- Double bottom breakout. The neckline is seen offering support at $409 levels.
- Inverse head and shoulders with neckline resistance at $528.
Inverse head and shoulders is considered to be a bullish reversal pattern. A break above the neckline ($528) would confirm the long-term bullish reversal – i.e. the sell-off from the record highs above $950 reached in September has ended.
- BCH looks set to test $528 (neckline hurdle) in the short-run. An upside break of the neckline would open the doors for a climb to $700.
- On the downside, only a break below $409 would abort the bullish view.
- In the larger scheme of things, only a move below $300 would signal bullish-to-bearish trend change.
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