Bitcoin Cash to $800 might just play out like this
Disclaimer: The findings of the following article are the sole opinions of the writer and should not be taken as investment advice
While Bitcoin Cash has not witnessed a blowout on the charts, its monthly ROI of nearly 50% was certainly a respectable figure. More importantly, the alt mirrored market-wide trends appropriately owing to its rising correlation with Bitcoin. With Bitcoin preparing to tackle levels above $50,000 again, the dynamics were certainly favorable for Bitcoin Cash. It eyed a key breakout on its chart.
At the time of writing, Bitcoin Cash was trading at $677.8 and held the 12th position on the crypto-rankings.
Bitcoin Cash 4-hour Chart
BCH has moved within a symmetrical triangle setup since forming a swing high at $715. Since the prices traded within an uptrend prior to the formation of the pattern, there was a good chance that this setup would function as a continuation of the same. The height of the pattern can be set as a potential target and an upwards breakout would propel BCH by 18% towards the $800-mark.
However, the triangle can function as a reversal pattern on a few occasions. If the market plays out in an unfavorable manner, traders must brace for an incoming sell-off. In this case, a close below BCH’s previous swing low of 652 would act as confirmation of a retracement.
BCH’s indicators lent weight to both narratives. The RSI traded within a descending channel and can be expected to break on the upside. A move above the upper trendline would likely spur more confidence for bullish traders. On the other hand, lower highs were observed on the Awesome Oscillator, resulting in a bearish twin peak.
This formation is usually seen prior to an incoming wave of selling pressure.
To even out both outcomes, the MACD maintained its equilibrium between buyers and sellers, with the same above half-line at press time.
BCH’s indicators were split evenly between two outcomes, but this is where its correlation with Bitcoin is expected to come into play. If BTC closes above $51,000 moving forward, expect a positive reaction in the BCH market as well, and vice-versa.
Meanwhile, traders can play safe and wait for a trend confirmation before entering a position.