Backed by strong volumes out of Asia, the price of bitcoin cash jumped to a two-week high today.
At press time, the bitcoin cash-U.S. dollar (BCH/USD) exchange rate is $390 - up 25 percent in the last 24 hours. Week-on-week, the cryptocurrency is up 24 percent, while on a monthly basis, it is still nursing a 5 percent loss.
Still, today's move is a jolt for the cryptocurrency, created via a hard fork of the bitcoin blockchain in early August this year. As bitcoin cash was awarded to investors who owned bitcoin before the fork, its built-in investor base helped catapult it to big volumes out of the gate.
However, bitcoin cash is arguably still in a period of price discovery - the digital asset clocked a record high above $970 on Aug. 19 before falling to $280 levels on Oct. 9.
The spike seen today is largely a volume driven. As per CoinMarketCap, the rally appears to have been fueled by Korean desks offering BCH/KRW pairs.
Volumes on Bithumb, one of the largest exchanges in South Korea, have jumped by 41%, a development that itself has become a notable trend as cryptocurrencies have seen big boons off listings in the region.
Looking ahead, though, an open question is does this rally have legs?
Price action analysis suggests bitcoin cash could test the psychological level of $400 in the short-run.
The chart above shows:
- A base building around $300 followed by a big move higher to $390 on the back of strong volumes.
- The relative strength index (RSI) is sloping upwards in favor of the bulls.
- Stochastic favors further upside in BCH prices as well.
- The trend line sloping downwards from Aug. 20 high and Sep. 20 low is seen offering resistance around $400 levels.
- A break above the descending trend line hurdle of $400 would mean the sell-off from the record high has found a bottom at $280 levels. The cryptocurrency could then revisit Sept. 19 high of $550.
- The odds of a bullish break are high, given the prices have seen an upside move on the back of strong volumes following a long period of congestion around $300 levels.
- On the downside, only a break below $300 would abort the bullish view on the daily chart.
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