Bitcoin Cash Is Up, But Correction May Be On Cards
Despite decent gains today, bitcoin cash prices could take a hit in the short-term, technical charts suggest.
Despite decent gains today, bitcoin cash prices could take a hit in the short-term, the technical charts suggest.
As per data source OnChainFX, bitcoin cash (BCH) has appreciated 9 percent in the last 24 hours. The cryptocurrency is strongly bid above $2,700, yet is still down 35 percent from its record high of $4,330 set on Dec. 20.
During the bitcoin rally from Sep. 15 low to November highs, BCH witnessed a sell-off to $400. Also, as bitcoin (BTC) neared the $20,000 mark in December, investors began diversifying into the "small cap" cryptos like bitcoin cash.
Thus, to some extent, BCH has an inverse relationship with bitcoin. And with BTC on the rise again, the BCH/BTC chart indicates that bitcoin cash is likely to underperform its rival in the short-run.
The above chart (prices as per Bitfinex) shows:
- The rally following a bullish falling channel breakout (on Dec. 19) ran out of steam at BTC 0.25.
- Over the last one week, 0.20 has acted as a strong resistance.
- A bearish crossover between the 5-day and 10-day moving averages was confirmed on Dec. 28. At press time, the moving averages are descending (favoring the bears).
Hence, bitcoin could gain an upper hand in the short-run – i.e. BCH/BTC could drop to 0.15 and possible to 0.10 in the short-term. The chart adds credence to the bullish case put forward by the BTC/USD chart (below) and points to a possible depreciation in the bitcoin cash-U.S. dollar (BCH/USD) exchange rate.
The above chart (prices as per Bitfinex) suggests prices could revisit the $2,000 mark as:
- The falling tops/lower highs pattern, indicates the bulls are losing control.
- BCH re-entered a falling channel on Dec. 30 and prices may move back above the falling channel hurdle this week.
- The bearish crossover between the 5-day and 10-day moving averages was confirmed on Dec. 27. The 10-day MA seems to have shed the bearish bias, but the 5-day MA is still sloping downwards in favor of the bears.
- Bitcoin cash could revisit $2,050 (Dec. 30 low) and may extend losses to the falling channel support of $1,850.
- Only a close (as per UTC) above $2,800 would abort the bearish view.
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