After hitting a high of $328, the price of Bitcoin Cash (BCH) began to decline and fell below the significant horizontal resistance level of $280
But even with this decline, the daily timeframe indicates an impending bottom and subsequent recovery in the BCH price that will eventually take the price to a new yearly high.
Bitcoin Cash has already sagged by nearly 30%
According to the results technical analysis of the weekly chart, the price has followed along a descending resistance line since May 2021. The lowest point reached by BCH during this period was $86, which was just above the historic low of $81 seen in December 2018.
BCH’s lowest point was $86, which was just above the historic low of $81 seen in December 2018.
Since then, however, the token has strengthened significantly. In January 2023, it managed to break out of the descending resistance line that had been holding it back for 609 days.
After the breakout, there was a brief pullback to levels prior to this bullish breakout.
After the breakout, there was a brief pullback to the levels that preceded this bullish breakout. However, in June, BCH made a vigorous rebound and accelerated its gains, reaching a new yearly high of $329.
The price has since fallen and is currently trading below the $280 resistance area.
The price has since fallen, however, and is currently trading below the $280 resistance area. A return to this zone would mean a 26% rise, while a fall to the nearest support level of $140 would mark a 40% decline.
BCH/USD price by week. Source: TradingView
The continued bullish price momentum is also supported by the weekly Relative Strength Index (RSI). This momentum indicator is currently above 50 and is steadily rising, which is a sign of a bullish trend.
What’s more, the entire upward price movement was preceded by a bullish divergence (shown by the green line). This favorable sign is often associated with bullish trend reversals, lending additional credibility to continued price gains.
BCH outlook: where is the bottom
Meanwhile, wave analysis of the shorter daily timeframe reflects a more favorable outlook for the token.
It suggests BCH has launched a five-wave bullish structure with an extended third wave. On July 18, the price bounced off the 0.382 Fibonacci retracement level. Fibonacci levels are traditionally considered the most likely springboards for stopping and reversing price after a significant advance in any one direction. Theoretically, they could define the limits of a price move.
The BCH price recently dipped below Fibonacci support but is currently trying to regain it. If this wave analysis is correct, BCH should complete the fourth wave either at the 0.382 Fibo level or near the 0.5 Fibo support level, which is at $204.
An upside correction of the fourth wave is likely.
There is a possibility of the price climaxing around $380-400 (4.21 extension of the initial wave and 1.61 level of the external correction of the fourth wave).
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In this case, the price could rise by about 80% from current levels. However, a fall below $204 will signal that this scenario may be wrong and BCH may fall to at least $160, which is 34% of the current price.
BCH/USDT price chart for the day. Source: TradingView
The definitively bullish outlook will be canceled, however, if BCH absorbs the first wave high at $156. If that happens, the price could fall to the $100 mark.