Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice.
Bitcoin Cash (BCH) sellers quickly pulled off a notable plummet from the 11-month $719 resistance. The bearish rally then halted at its long-term liquidity range, near its Point of Control (POC, red).
Given the current structure below its EMA ribbons, the sellers visibly steered the near-term trend. So, the upper railing of the pitchfork could continue to put substantial bullish recovery attempts on a leash. At press time, BCH was trading at $307.2.
BCH Daily Chart
Source: TradingView, BCH/USDT
Over the last few months, the altcoin’s movement has come under much selling pressure. A recovery from late January lows identified the reversal of the bear cycle. In this bullish endeavor, the buyers provoked a double-bottom pattern on the daily timeframe. Thus, BCH rushed to test the upper trendline of the current up-channel (yellow).
Soon after a short-lived revival above its EMA ribbons, BCH succumbed to its bearish tendencies. The subsequent plunge below its ribbons compressed its movement between the 20 EMA and the POC.
With a rising gap between the EMA ribbons, the sellers visibly exhibited their near-term dominance. They further gained thrust after the evening star setup that pulled BCH towards the median of the Pitchfork.
A pull below the current pattern could lead the alt to test the POC in the coming sessions. In this case, maintaining the $275-support would be critical to prevent a major fallout. A close above the upper fence of the Pitchfork is what the bulls need to alter the current selling tendencies.
Rationale
Source: TradingView, BCH/USDT
The Relative Strength Index gradually rose from the 33-mark baseline. But, it is yet to challenge the equilibrium to confirm a change in momentum in favor of the buyers.
Further, the OBV continued to depict an increase in the underlying buying power whilst the price action kept plunging over the last 14 days. So, a price recovery above near the upper trendline of the Pitchfork shouldn’t surprise the investors.
Conclusion
Looking at the press time market structure fused with the selling sentiment, the EMA ribbons and upper trendline of the Pitchfork would continue to pose hurdles in the recovery process. A break below the up-channel should alert the traders to a potential drawdown.
Moreover, BCH shares an 89% 30-day correlation with the king coin. Thus, keeping a watch on Bitcoin’s movement would be vital in making an accurate decision.
