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.
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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.
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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.
