Bitcoin Cash May See Prolonged Battle Before Recovering $ 800

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Bitcoin Cash was defying some rigid price barriers en route to the $ 800 mark. The daily 50-SMA (yellow), 200-SMA (green) and 50% Fibonacci level were immediate obstacles to the BCH price advance.

Meanwhile, an indecisive DMI and weakened MACD have suggested BCH may dive into short-term defenses before gaining momentum to push higher. At the time of this writing, BCH was trading at $ 615.3, up 0.7% marginally in the past 24 hours.

BCH daily chart

Source: BCH / USD, TradingView

After losing 42% of its value between mid-September and the end of September, Bitcoin Cash has seen a much needed rebound around the $ 470 mark. The alt has embarked on an upward race and cleared the first hurdles present at the 20-SMA (red) and 38.2% Fibonacci level.

In order to extend the gains towards the September high of $ 805, BCH had to trade above the 50-SMA and 50% Fibonacci level. This latest price mark also coincided with Visible Range’s POC and could be a tough nut to crack. From there, a close above the 61.8% Fibonacci level on solid volumes would open a path back to the local high.

On the other hand, this bullish bias will be lost if BCH concedes the Fibonacci level of 23.6% to the bears. From there, short sellers could initiate new draws below 20-SMA (red).

Reasoning

Now, despite the BCH pickup since late September, the bulls were not yet in the driver’s seat. This was evident on the Directional Movement Index, which failed to identify a clear trend on either side. A weakened ADX also hinted at a period of consolidation before the next swing.

Meanwhile, the MACD had yet to recover above the half line, a reading that should keep bullish traders at bay. However, a strengthening of the RSI presented some counter-arguments. The index suggested that the bulls were progressively advancing in the market.

Conclusion

As buyers and sellers compete in hotly contested ground, expect BCH to trade sideways just above the 38.2% Fibonacci level. Once the broader market activates the risk, BCH will need to move above the 61.8% Fibonacci level to recover the $ 800 mark.

Traders should wait for bullish confirmation via DMI, MACD and RSI before taking long positions. Although BCH currently only presents a handful of opportunities for short sellers, traders can take such positions in case the price drops below $ 550.


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