Bitcoin cash is buoyant again today, but some hints of bull exhaustion are starting to show.
At press time, the bitcoin cash-U.S. dollar (BCH/USD) exchange rate is $1,340. As per data from CoinMarketCap, the cryptocurrency has gained over 9 percent in the last 24 hours.
The gains come after record highs near $2,500 last week, reportedly due to a flow of money out of bitcoin (BTC) and into alternative protocols following the suspension of a controversial plan to alter the bitcoin's code. However, overbought technical conditions pushed prices back to $1,000 yesterday.
Still, dust now cleared, yesterday's pullback looks like nothing more than a normal technical correction, given that trading volumes dropped by 42 percent.
Despite the ups and downs, though, the cryptocurrency regained bid tone today, possibly on speculation that a successful outcome for a just-implemented hard fork of BCH may boost the protocol's appeal as a payment network. Also, a detailed look at the individual markets reveals the rally has been fuelled by Korean exchanges offering BCH/KRW pairs.
That said, the price action analysis indicates some bull market exhaustion, and the downside, if any, is likely to be capped at around $1,000 levels.
Yesterday's doji candle signals bull market exhaustion. An end of the day close below $1,000 would confirm a bearish doji reversal and open the doors for a pullback to $700 levels. The RSI is overbought as well.
As a result, a correction looks more likely, but the upward sloping 5-day MA and 10-day MA indicate any dips below $1,000 are likely to be short-lived.
Bullish scenario: a rebound from the rising trend line followed by a break above $1,549 would add credence to the basing pattern on the RSI and hint at a climb to $2,000 levels.
- The base appears to have shifted higher to $1,000 levels.
- A short-term correction is likely, though dips below $1,000 are unlikely to last long.
- On the higher side, a move above $1,549 would revive the bullish move.
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