Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Earlier this month, Bitcoin Cash soared to as high as $600 with a candlewick as far north as $629. Subsequent retracements tested the $400-region, but on the longer timeframe, the $400 and the $460-levels were being defended strongly. However, since mid-January, BCH has been unable to rise past $535.
Over the past week, Bitcoin Cash has been trading within a descending channel. The cryptocurrency’s movement might see a reversal to the upside over the next few weeks, but over the next few days, a bearish scenario was still prevalent for Bitcoin Cash.
Bitcoin Cash 12-hour chart
Source: BCH/USDT on TradingView
The descending channel is a bullish reversal pattern, but at the time of writing, there was no indication that BCH was primed for a breakout past the channel. On the contrary, the $414-level of resistance, as well as the mid-point of the channel, can be expected to oppose the bulls.
Over the next few trading sessions, the reaction of the price at the $400-level would be of interest. A rejection there would see BCH drop under the $371-support level to test the channel’s lower boundary.
Rising past $400 would still see BCH face some resistance at $415 and the channel’s upper boundary at $430-$435.
The RSI also painted a bearish scenario for Bitcoin Cash as it stayed under the value of 50 to denote that a downtrend was in progress. The OBV suggested that some volume of BCH was sold over the past couple of days. In fact, it registered a series of lower highs after BCH touched $600. Continuation of the same would affirm the selling pressure on BCH.
Conclusion
Bitcoin has clung strongly to the $30,000-level, and Bitcoin Cash is positively correlated to Bitcoin. A strong move for Bitcoin will likely be reflected for Bitcoin Cash, and hence, the $30k-$32k for BTC is a region that BCH bulls would also need to keep an eye on.
The momentum was bearish for BCH. It could continue on its bounce to test $400 before seeing a move back to the downside, and will likely see the $371-level of support flipped to one of resistance in the coming days.
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