Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
Bitcoin Cash’s price was still in the red following Bitcoin’s crash, and it might continue to head lower on the charts. At press time, BCH had a market cap of $8 billion and was the ninth-largest cryptocurrency in the world, right after Chainlink.
On the price charts, Bitcoin Cash’s price had broken out of its bear flag and was very close to its target. However, considering how bearish Bitcoin is, BCH might tap the support after a 4-5% dip.
Bitcoin Cash 4-hour chart
Source: BCHUSD on TradingView
Bitcoin Cash’s price consolidation started after it hit a peak of $654 on 9 January, with the same followed by a crash on the charts. The consolidation into an ascending channel worsened BCH’s chances of trending higher. Bitcoin dropping at the right time fueled BCH’s breakout from this channel, leading to a 25% drop to its press time trading level.
However, the theoretical target for BCH was 31%, meaning, a 5% drop was still on the horizon. A 5% drop would put BCH at $378, almost half of its peak two weeks ago.
The RSI indicator registered a bounce off the oversold zone, showing that the buyers have already lined up to buy this dip. However, it is yet to see if and when the price dips lower, something that will push the RSI into the oversold zone.
A similar formation was observed on the Stochastic RSI indicator, with the same in the oversold zone. Unlike the RSI, the Stochastic RSI had already formed a bearish crossover, highlighting increased interest from buyers.
Unlike the RSI or Stochastic RSI, the MACD indicator showed that both the fast and the slow-moving lines were still below zero. However, the lines were getting closer to each other, hinting at a potential bullish crossover.
Conclusion
While the theoretical targets suggested that a dip might still be on BCH’s cards, indicators suggested it might be time to head higher. The bullish indications from the technical indicators hinted that this drop might never come. However, if the price heads higher, the upper trendline will be a good area of resistance or an immediate target.
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