The fifth-largest crypto in the market, Bitcoin Cash seems to have suffered the same fate as many altcoins – a drop in price. This drop in price follows the altcoins’ correlation with Bitcoin, the world’s largest cryptocurrency. With BTC’s price surging higher, it would be logical for people to flock towards BTC and away from altcoins like Bitcoin Cash.
Bitcoin Cash’s 4-hour chart
Source: BCHUSD on TradingView
Bitcoin Cash is on its way to perform a Bart pattern, one that will push the price down to where it all began – $272. A Bart pattern is when the price of a crypto-asset surges quickly and almost vertically, then moves sideways due to the exhaustion of buyers. This is finally followed by a drop in price to the original level, thus creating a pattern that is similar in likeness to Bart Simpson, a character from a sitcom – The Simpsons.
Although the price has initiated the Bart pattern, it hasn’t completed it yet. Hence, there might be a chance to short the coin for a profit of ~4%. The short position seemed simple, however, and the downsides include a tight stop which could invalidate the position. Hence, it is advised to adjust the stop-loss based on one’s appetite for risk.
Additionally, the RSI indicator was depicting a bounce even before hitting the oversold zone. Considering the situation, this bounce might be a fake surge. A much more conservative short position would open at the resistance [$287.64] with a stop-loss set at $294.38, while having the same target as the aforementioned short position.
Either way, the target for BCH in the short-term was at $269.97. Profits can be taken at $276 as well since there is a small resistance that might prevent the price from dipping lower. Further, the RSI was almost near the oversold zone and supported the target of $276.
With the sudden increase in BTC’s price, its dominance has risen as well. Hence, it is obvious that the correlation between BTC and altcoins is stronger now. Hence, the worst scenario would be for Bitcoin to pump, a development that would lead to altcoins following suit. This might invalidate the short position.
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