Bitcoin Cash (BCH) finds itself at a critical juncture after a steep 10% drop in the past day, testing a key horizontal support zone at $388. The cryptocurrency, which has been consolidating within a descending triangle since peaking at $645 on December 6, is now presenting two possible outcomes: a breakdown or a bounce.
Key Technical Insights
BCH’s price has formed a descending triangle, typically signaling continuation of the prevailing trend. The daily chart reveals that BCH completed a five-wave impulsive structure at $716, followed by an ABC corrective wave. The correction has led BCH to a crucial support zone near $388, just below the 0.618 Fibonacci retracement level.
The Relative Strength Index (RSI) on the daily chart is neutral but hints at bearish divergence, suggesting weakening momentum. Failure to hold this $388 support could accelerate BCH’s decline toward deeper retracement levels.
Bearish Scenario
Under the bearish outlook, BCH is currently in the final phase of a WXY corrective pattern. If this holds true, the ongoing wave Y could push prices down to target levels near $322 (0.618 Fibonacci retracement), $291–$270 (Fibonacci extensions), or even $215. A breakdown below $388 would validate this scenario, leading to increased selling pressure.
Bullish Scenario
Conversely, a breakout above $432 (0.236 Fibonacci retracement) could signal a recovery wave, with bullish targets at $472 and $511. For this to materialize, BCH must overcome immediate resistance and establish a sustained upward momentum.
Short-Term Outlook
On the 1-hour chart, RSI is nearing oversold territory, hinting at a possible temporary bounce. However, the RSI’s continued divergence from price suggests that any recovery may remain capped below immediate resistance at $432.
Key Levels to Watch
- Immediate Resistance: $432
- Key Support: $388
- Bearish Targets: $322, $291–$270, $215
- Bullish Target: $472 (breakout zone for reversal)
Conclusion
Bitcoin Cash faces a pivotal moment as it tests critical support at $388. The outcome will likely set the stage for its next significant move, with a breakdown pointing toward deeper bearish targets and a breakout offering hope for recovery. Traders should closely monitor these key levels to gauge BCH’s direction in the coming days.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always consult a professional before making investment decisions.
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