Bitcoin Cash recently broke above the neckline of an inverse head and shoulders pattern, indicating that a reversal is in the works. Price could climb by the same height as the formation, which spans around 110.00 to 130.00, but might need a correction first.
Applying the Fibonacci retracement tool on the latest swing low and high shows that the 61.8% level lines up with the broken neckline, which might now hold as support. However, it also seems that the 38.2% level already held as a floor on the pullback and Bitcoin Cash could resume its rally from here.
The 100 SMA is above the longer-term 200 SMA to confirm that the path of least resistance is to the upside. In other words, the uptrend is more likely to gain traction than to reverse. These moving averages are slightly below the broken neckline and might add another layer of support also.
RSI is just turning lower from the overbought zone to indicate that selling pressure is returning. This could keep the correction going for a while since the oscillator has plenty of room to move south before hitting the oversold region. Stochastic is also just making its way down from the overbought region to signal a pickup in bearish momentum.
Most cryptocurrencies are seeing green these days, likely buoyed by the improvement in sentiment as traders look forward to stronger institutional inflows in the months ahead.
For Bitcoin Cash itself, it also helps that Coinbase has rolled out support for Bitcoin Cash on its custodial wallet app. This allows users to store BCH in their wallet directly after previously being limited to transactional support only.
Its announcement read:
“The new Wallet update with Bitcoin Cash support will roll out to all users on iOS and Android over the next few weeks. BCH support is activated by default — all you need to do is tap ‘Receive’ on the main wallet tab and select Bitcoin Cash to send BCH to your Coinbase Wallet.”