Show an ascending channel swing (yellow) for more than three months, this has more or less been a bearish sight in Bitcoin Cash [BCH] market. An expected breakdown of the ascending channel on April 30 has placed BCH in a bearish move for almost a month now.
As the altcoin hovered near its checkpoint (POC, red), it stood at a moment that marked mainly two obstacles.
Essentially, the upper trendline of the bearish pennant coincided with the resistance of the two-month trendline to pose a rigid barrier. Any close below the $186 area could lead to further losses. At press time, BCH was trading at $191.9.
BCH daily chart
Due to its strong correlation to Bitcoin, it was relatively easy for BCH bears to find renewed selling pressure. A correction of the $719 zone in November last year identified the reversal of its long-term bullish cycle.
Since then, the coin has been on a steady decline. On the way down, the $275 level offered strong selling resistance. But the broader sell-offs took BCH to a 26-month low on May 12.
Over the past couple of weeks, BCH has entered a tighter phase within its bearish pennant. Moreover, with volumes still in the decline phase, the short-term chances of bullish comeback efforts seemed quite low.
But on the other hand, the price had widened its gap too much with the 50 EMA (cyan). For more than 11 months, the price has shown its tendency to rebound after extending more than 25% below the 50 EMA. Additionally, buyers are keen to reject any price declines to the two-year support at $186.4. So, any close below the 186 level could confirm a strong downside chance.
Over the past ten days, the bearish RSI has seen higher spikes in its effort to jump above the oversold region. During this time, it formed a bearish divergence with the price. So he also saw a growing spread from the corner as he aimed to test the 33 mark.
With the MACD lines entering a bullish crossover after nearly two months, the selling pressure has eased. Buyers still had to close the gap between the MACD lines and zero to claim an advantage.
The altcoin has given mixed signals in the current structure. The formation of a bearish pennant that approaches the resistance of the two-month trendline is an excellent bearish case. A close below the $186 level would confirm this narrative.
But with too wide a gap between the price and the 50 EMA, buyers should ideally step in to avoid a large fallout.
Additionally, BCH shares a 98% 30-day correlation with the king coin. Thus, monitoring the movement of Bitcoin would be essential to make an accurate decision.