In recent weeks, Bitcoin Cash (BCH) has been making waves in the cryptocurrency market, catching the attention of both seasoned and novice investors. Since August 17, BCH has shown remarkable resilience and promise, and it has left many wondering about its potential for the future.
Breaking Free from Corrective Patterns
Around August 17, Bitcoin Cash (BCH) began to show signs of a bullish resurgence. It managed to break free from a corrective pattern just 12 days later, setting the stage for what could be an exciting journey for investors.
Taking a closer look at the weekly timeframe, we see that back in January, BCH made a significant breakthrough by shattering a longstanding descending resistance line that had held strong for an impressive 623 days. This breakthrough was seen as a momentous event, but BCH encountered some challenges in maintaining its upward momentum.
In June, BCH experienced a notable increase in value, reaching a new yearly high at $329. However, since then, the price has retreated, confirming the $300 level as a significant resistance point (marked in red). If this downward trend persists, the closest support level can be identified at $150, representing a potential 30% drop from the current price. On the flip side, to regain the $300 range, BCH would need to rally by 40%.
Weekly RSI Signals Bullish Sentiment
While the weekly price action remains somewhat neutral, there’s a ray of hope in the form of the weekly Relative Strength Index (RSI), a tool used by traders to assess market conditions. RSI readings above 50 in an upward trend generally indicate a bullish sentiment, while readings below 50 suggest the opposite.
Currently, the RSI has rebounded at the 50 mark (indicated in green), a promising sign for a bullish trend. This suggests that despite some challenges, there is optimism among investors regarding BCH’s potential.
The Daily Perspective: Strongly Bullish
While the weekly outlook may be uncertain, the daily chart tells a more decisive story, one that is strongly bullish. This bullish sentiment is derived from both the price action and the application of Elliott Wave theory.
Elliott Wave theory is a tool employed by technical analysts to determine the direction of a trend by studying recurring, long-term price patterns and taking into account investor psychology.
According to this theory, BCH has initiated the fifth and final wave of its upward movement (indicated in white). This fifth wave began after the cryptocurrency rebounded from the 0.618 Fibonacci retracement support level at $180 on August 17 (highlighted in green). If this wave count holds true, the cryptocurrency’s price is expected to reach a high close to $425, a target derived from the 1.61 Fibonacci extension of the fourth wave’s decline (shown in black).
Adding weight to this wave count is a breakout from a descending parallel channel that had confined the movements of the fourth wave. Additionally, the daily RSI is comfortably above 50 and on the rise, both positive indicators of a bullish trend.
Consequently, the most likely trajectory for BCH appears to be an upward movement toward $425, representing an average gain of 100% from the current price.
Potential for Growth, but Caution is Advised
While the bullish outlook for BCH is undoubtedly exciting, it is essential to exercise caution in the volatile world of cryptocurrencies. Failure to sustain this upward momentum could result in a 30% decline to the $150 horizontal support area, potentially invalidating the bullish wave count.
In Conclusion
Bitcoin Cash (BCH) has shown remarkable resilience and potential for growth since August 17. Technical analysis, both on the weekly and daily timeframes, provides valuable insights for investors. While the weekly RSI signals bullish sentiment, the daily chart points to the possibility of significant gains, with a potential target of $425.
However, it’s crucial to remember that the cryptocurrency market is inherently volatile, and predictions are subject to change. As with any investment, it’s wise to conduct thorough research, consider risk management strategies, and consult with financial experts before making any decisions.
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