Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be considered investment advice
Bitcoin Cash broke above the $315 level and retested it as support in the past week before climbing to the $350 extension level, which was also an area of significance for the price. In the near-term, bullish momentum was likely to sustain. Bitcoin neared resistance at the $46k mark, but it was possible that Bitcoin would push higher toward the $49.3k mark.
Source: BCH/USDT on TradingView
The direction of Bitcoin Cash is heavily influenced by the direction of Bitcoin. In the past few days, BTC broke strongly past the $39k mark on the back of strong demand. In the near term, a pullback to $42k could be possible.
For Bitcoin Cash, a set of Fibonacci retracement levels (yellow) were plotted based on the move from $259.6 to $314.9. This presented the 27.2% and 61.8% extension levels at $329.9 and $349.1, and at the time of writing BCH has faced some selling pressure at $349.1.
The $315-$325 area is a liquidity pocket, an area where demand is likely to be seen. However, it was unclear whether a pullback in search of liquidity was imminent, or whether continued bullish impetus can be expected. A session close below $334 could see a move toward the $320 area.
Rationale
Source: BCH/USDT on TradingView
At the time of writing, the RSI on the hourly chart was dropping from the overbought territory, while the MACD was also well above the zero line. This indicated that recent bullish momentum was strong.
The OBV was also in an uptrend in the past week to highlight the strong demand behind BCH’s rise above $315. There was the likelihood of a minor pullback for BCH in the next few hours. As long as the price does not close a session below $334, the near-term bullish market structure can be expected to continue. To the upside, a move back beyond $349 would set a target of $370 for BCH in the days to come.
Conclusion
The indicators showed strong demand and bullish momentum for Bitcoin Cash, while the market structure has also been bullish in recent days. A pullback to $315 can not yet be ruled out. It was also likely that Bitcoin Cash, alongside Bitcoin, could be pushed further higher by demand.
