BCH/USD: Recent Price Behavior
Bitcoin Cash is back under selling pressure, resuming the downward trend which commenced late in June. The price over the last two weeks has been ranging, moving within a narrowing fashion and consolidating.
Price action formed a bearish flag structure from 14th July up to 14th August, where the bears managed to force a breakout. A retest of the pattern was seen and then the price went back into tight range trading. It saw the formation of a bearish pennant, which has been breached and extended to the downside over the last two sessions.
The noted price behavior comes after losing a lot of ground of its 2019 recovery, where BCH/USD had gained as much as 385%. At the beginning of the year, the price was down at the $105 mark, rallying up to $515. Bitcoin Cash has since dropped as much as 45% from those noted heights.
Head and Shoulders Structure
BCH/USD since the start of April has been forming a head and shoulders technical structure. The left shoulder having formed from the beginning to the end of April. Then the head was produced between May until mid-July. Lastly, the right shoulder, which is still under construction, is heading back towards the neckline area of $260-$230 at the time of writing.
The noted neckline is a huge area of demand, which would be very punishing if the bears managed to force a breach. Given the technical formation and bearish trend, BCH/USD is subject to potentially playing out to this. If it does materialize, then Bitcoin Cash could likely give back all of its 2019 recoveries.
As a rule of thumb, the price will typically fall the same distance between the head and neckline of the pattern. The current pattern is measured at some $250, which would see the price breaking its record low and further falling into the abyss. BCH/USD only has two significant safety barriers: the $260-$230 range and then the all-time low down at the $100 price area.
Given the recent breakout from a near-term bearish pennant structure, further downside pressure is eyed. In terms of targets; $250, $230 and then $120-$100 are eyed should the bears manage to break down the neckline of the head and shoulders. Stops would be placed just above the noted pennant at $321.
If the price fails to find buyers around the first target area of $250-$230, then a decent wave of selling pressure will likely trigger. Shorts will at that point remain attractive.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.