Bitcoin Cash Climbs 15.7% This Week as Institutional Flows Meet Technical Support at $603
Market Structure Shifts Higher
- First, daily momentum indicators are no longer in oversold territory, setting the stage for a potential acceleration higher as they did in previous Q1 rallies.
- Second, given the recent surge, BCH is poised to close above a 3-month downtrend for the first time this quarter, continuing to monitor for further upside with $720 acting as potential resistance.
- Finally, the recent move into positive but still below average positive momentum is indicative of increased institutional buyers seen in the Bitwise SEC-approved cryptocurrency index fund.
Bitcoin Cash rebounded strongly during this week’s trading session, advancing 15.7% to reach $603.47, as the altcoin drew support from various technical and fundamental factors. The uptick eliminated most of its prior-month losses while elevating BCH over key moving averages for the first time since the end of November. Given the relative strength index (RSI) is now trading neutral, along with the recent approval by the Securities and Exchange Commission (SEC) to list an exchange-traded crypto index fund that holds BCH, traders must now decide whether the cryptocurrency will garner enough buying demand to extend its positive performance over the $600 or face a pullback near the $640 resistance.
| Metric | Value |
|---|---|
| Asset | BITCOIN CASH (BCH) |
| Current Price | $603.47 |
| Weekly Performance | 2.30% |
| Monthly Performance | 15.67% |
| RSI (Relative Strength Index) | 55.9 |
| ADX (Average Directional Index) | 17.7 |
| MACD (MACD Level) | 13.78 |
| CCI (Commodity Channel Index, 20-period) | 68.93 |
RSI Rebounds From 51.08 as Bulls Regain Control of Momentum
The current Daily Report recalls a similar consolidation pattern back in late-July, early August before Ethereum made lower lows. The 12 and 26 EMAs are clearly trending negatively which would suggest another run back down towards $520, possibly making new lower lows.
A surge above the 40-50 resistance zone would help confirm BCH’s short-term bottom while also likely leading to trading at or above $280 ahead of year’s end. If we rally further and approach overbought conditions, one could consider taking a portion of swing longs off the table, with the intent to reload on potential pullbacks if a broader rally is still in store.
ADX at 17.72 Signals Range Expansion Ahead After Tight Consolidation
The strength of the trend is not very high, given that the ADX is only 17.72. This means that the recent price action is more of a relief rally than a bona fide trend. We are simply moving from the tight $555-$575 consolidation period that characterized early January to a potential trending period. The low ADX is, in fact, a positive for the bulls at this stage – the trend assumedly hasn’t even kicked off.
Based on historical patterns it is more realistic to expect an initial pullback following an eventual break higher. While that may not be the immediate response to the approval of a Bitcoin ETF, the Wyckoff distribution combined with current long-term resistance and the subsequent overall acceptance and validation of cryptocurrencies by the global mainstream financial system is a setup to which previous solid breakouts have led.
20-Day EMA at $586 Flips From Resistance to Key Support Level
Based on the price action above the EMA ribbons, structural improvement can easily be gleaned. BCH is currently exchanging hands above the 10-day ($597), 20-day ($586), and 30-day ($577) EMAs, something that wasn’t the case for the majority of December. The 20-day EMA specifically is an important exponential moving average that facilitated this transition, having previously rejected advances on three separate occasions in late December. As can be determined from recent action, this had now managed to convert into support following the successful test during Tuesday’s slight leg downward.
This week’s share price uptrend accelerated significantly en route to the 12th’s $734 high and $36% weekly gain. This pushed BCH back into the equivalent of a MACD overbought region unseen since December 2020. No doubt more extended conditions must to be worked off and profit-taking could sink deeper over the coming weeks.
Resistance Clusters Between December High at $637 and Monthly R1 at $639
Sellers have strengthened the $637-$640 zone above current levels, with December’s monthly high meeting the pivot point system’s monthly R1 at $639.77. This double resistance is the immediate ceiling over which bulls must take control to confirm the uptrend. From there, the monthly R2 at $761 and R3 at $1,478 appear far away, but these are the levels at which important profit-taking begins to enter the market if momentum really starts to build again.
The recent consolidation provided a much-needed chance for bulls to catch their breath after the February rally and subsequent 10-day surge after the re-test of the $400 breakout level. This period alleviated significantly overbought conditions on the daily chart, allowing the bullish explosion from the handle to the January cup to play out.
Buyers have the advantage within the market structure as long as BCH holds above the $566 level where the 50-day EMA and the weekly pivot converge. Price consolidated and based out between $555 and $575 throughout the first week of January. This week, we saw price explosively push and close above the 12, 26, and 50 EMAs on the daily chart. This price action looks very similar to the base that was put in before the last two extended moves to the upside. Coupled with potential institutional money coming in through the Bitwise fund, the technicals are in line with some solid fundamental catalysts.
Bulls Target $640 Breakout as Bitwise Inclusion Provides Fresh Catalyst
If BCH can manage to secure a healthy daily close above $640 then the path of least resistance is squarely up to the monthly R2 at $761. There is little to no significant resistance between these two levels. Reset momentum indicators, EMA’s getting taken back, and an institutional product listing solidify a perfect environment to make a run at it. Volume will need to confirm on higher than average — we are seeing moderate upticks on the volume increasingly but no real adrenaline rush just yet.
If the $520 support gives way, a quick descent to $500 and the $485-$487 inflection point could ensue. Further losses might then cause BCH to test the 200-day EMA at $470 and the critical $452 previous resistance region. Buyers are likely to show up there to defend their positions. A break below $450 would invalidate the current uptrend and could lead to choppy, directionless trading in the short term.
Based on the technical structure and macro tailwind, the odds slightly favor continued resolution to the upside and BCH retesting the $650 levels in the coming weeks as the base effect from this impulse creates the first-tier resistance (38.2% Fibonacci retracement of the April 16-23 sell-off).
