Bitcoin Cash (BCH) Seeks Breakout From Bearish Structure — Key Levels To Watch

Key Takeaways

• Bitcoin Cash price failed to extend its drawdown as it found support to invalidate the bearish flag.
• The CMF and AO are near the neutral regions, indicating that the crypto has not found a clear trend.
• BCH’s next direction depends on key price points, with the $359 resistance as the major determinant.

The price of Bitcoin Cash (BCH) has decreased by 27% in the last month after failing to break above $400 on several occasions. As a result, the cryptocurrency has endured a bearish trading pattern.

Over the last few days, BCH has been consolidating near key support levels. Still, it struggles to gain bullish momentum that could trigger a breakout.

If BCH successfully flips its resistance into support, it could rally past the $400 mark. However, due to the current structure, achieving this breakthrough might be challenging.

Key price levels will play a crucial role in determining BCH’s next move—whether it breaks out toward higher highs or faces a pullback. Here’s is what to watch out for.

Bitcoin Cash Escapes Another Correction

On Jan. 31, Bitcoin Cash price neared $450 but failed to break above the region. This rejection caused the altcoin price to crash and drop below the $400 psychological support.

On the daily chart, CCN observed that the decline led to the formation of a bear flag.

A bearish flag is a continuation pattern that suggests the existing downtrend will persist. It consists of two parts. First is the flagpole, which shows a sharp price drop due to strong selling pressure.

The other is the flag which indicates a  brief consolidation phase where prices move slightly upward or sideways

Once the flag formation completes, the price typically breaks downward with a move approximately equal to the flagpole’s length. However, in BCH’s case, the price did not break down with an equal length to the pole.

Instead, Bitcoin Cash found support at $315.77, which appears to be invalidating the bearish outlook. Amid the bounce, the Chaikin Money Flow (CMF) reading has also bounced. While this indicates rising buying pressure, it is yet to rise above the zero signal line.

To validate the upswing or run above $400, Bitcoin Cash price has to rise past the resistance at $359.11. Should it fail to do that, then the anticipated bullish move might be invalidated.

BCH’s Next Move Depends on These

Using the 4-hour chart as another yardstick, here are the other price levels to look at. According to the image below, the Awesome Oscillator (AO) on the 4-hour chart has flipped to the positive region, but still hovers around the neutral point.

This means that momentum around BCH is yet to be completely bullish. Like the daily chart, the 4-hour timeframe shows that the $359 region is key to determining Bitcoin Cash’s price next move.

This is because the price rests around the 0.618 Fibonacci level.  With the price already above the 0.786 Fib level, a rise above $359 at the golden pocket ratio could validate a rally toward $412.89.

Should the price rise above this point, then Bitcoin Cash price could rally toward $500. On the other hand, if the price fails to break $359, it could experience rejection.

If validated, BCH could decline to the support at $300, and completely delay the anticipated bullish move.