Bitcoin Cash (BCH) has taken a 10% hit, falling to a key horizontal support level near $388. With a descending triangle pattern in play, the next move could be critical. Will BCH bounce back, or is a deeper correction in store?
BCH Faces Key Support Zone
Bitcoin Cash has been in a downtrend since reaching a high of $645 on December 6. The latest decline has brought the price back to the crucial $388 support, a level that has historically served as both a consolidation point and a pivot for past price movements.
The daily chart shows that BCH completed a five-wave impulsive structure peaking at $716, followed by an ABC corrective wave that found initial support near $300. The current price movement suggests that BCH is either forming a complex WXY correction or has already completed an ABC correction down to $300.
Two Potential Outcomes for BCH
Bearish Scenario
If BCH fails to hold the $388 level, the selling pressure could intensify. The next key support zones lie at $322 (0.618 Fibonacci retracement) and $291–$270, aligning with Fibonacci extension targets. A deeper retracement could push BCH toward $241 or even $215, marking a full 0.786 Fibonacci retracement from the daily chart.
Bullish Scenario
On the other hand, a breakout above $432 (0.236 Fibonacci level) could trigger a recovery wave, with bullish targets set at $472 and $511. This would indicate that the current correction is nearing its end, setting the stage for a potential trend reversal.
Technical Indicators Suggest Uncertainty
- Relative Strength Index (RSI): The daily RSI is neutral but shows signs of bearish divergence, hinting at weakening momentum. On the 1-hour chart, RSI is approaching oversold levels, which could lead to a temporary bounce.
- Elliott Wave Count: The wave structure suggests that BCH is either concluding wave Y with a projected bottom near $291–$270 or is ready to break out above $432 for a corrective rally.
- Descending Triangle Formation: The current price action aligns with a descending triangle, which typically signals further downside unless a breakout occurs.
Key Levels to Watch
- Immediate Resistance: $432 (0.236 Fibonacci level)
- Key Support: $388 (0.786 Fibonacci retracement on 1-hour chart)
- Critical Support: $322 (0.618 Fibonacci retracement on daily chart)
- Bearish Target for Wave Y: $291–$270 (Fibonacci extensions)
- Invalidation Zone: Above $472, signaling a bullish reversal
Conclusion
Bitcoin Cash is at a pivotal moment, with two major outcomes on the horizon. Holding above $388 could spark a recovery rally, while losing this level might open the doors to further downside toward $300 or even lower. Traders should keep a close eye on key resistance and support zones to gauge BCH’s next major move.
