Bitcoin Cash Price Breaks out From 98-Day Resistance – How Likely Is BCH Run to $700?

Key Takeaways

• Bitcoin Cash (BCH) broke out from a 98-day resistance trend line in July.
• The BCH price reclaimed the long-term horizontal support area at $350.
• Will the BCH price continue to increase after these two bullish signals?

Bitcoin Cash has struggled with a persistent downtrend since its yearly high in April. In July, the price broke down from a long-term support area at $350, briefly declining below $300. However, it has regained its footing since July 5, reclaiming the previously mentioned support area and breaking out from a resistance trend line.

Considering its recent breakout and reclaim, it is possible that BCH has ended its correction and started a new upward trend. Is this the case, and if so, how long will the price of BCH continue to rise?

Bitcoin Cash Breaks Out After Reclaim

The daily time frame BCH price analysis shows a 60% decline between April 5 and July 5. Despite that, BCH regained its footing on July 5 and has increased by 33% since.

The vital part of this upward movement was the reclaim of the $350 horizontal area and breakout from a 98-day resistance trend line. Given the previous movement, the breakdown below this area is considered to be a deviation (red circle).

The increase was preceded by a bullish divergence in the daily Relative Strength Index (RSI, green). After the divergence, the indicator moved above 50 and created a new high, confirming a bullish swing failure low. So, the RSI validated the upward movement.

Bitcoin Cash’s wave count also paints a positive outlook. It shows a completed A-B-C corrective structure (white) in which waves A to C had a 1:0.618 ratio, which is common in these structures. The sub-wave counts are in black.

The breakout from the resistance trend line fits perfectly with a completed correction and implies an upward movement has started. If this is the case, the 0.618 Fibonacci retracement resistance level at $55 creates the next target.

The reaction once the BCH price reaches $555 will be key in determining whether this increase is part of a larger correction or the beginning of a bullish trend reversal. If Bitcoin Cash breaks out, it can increase toward a new yearly high.

Mt. Gox Announces Repayment

Mt. Gox announced it will begin distributing recovered Bitcoin (BTC) and Bitcoin Cash to creditors from July 2024.

This distribution marks a key step in the ongoing rehabilitation process  following the exchange’s collapse in 2014 due to a major hack. The recovered assets include 142,000 BTC, valued at approximately $8.8 billion, and 143,000 BCH, worth around $400 million.

Creditors will receive their portions through exchanges that have completed the necessary procedures with the Rehabilitation Trustee.

Some X users do not believe the payments will happen because several announcements in the past have not led to anything. Others believe this will be the market bottom  since that is what happened the last time there was negative news surrounding Mt.Gox.

It is worth mentioning that BTC has a circulating supply of 19,716 million, while BCH has a circulating supply of 19,724 million. Therefore, the releases will increase the circulating supply by less than 1%.

When further considering that the release will be periodic instead of a lump sum payment, lasting from July to October, it is not likely to have a major effect on the price.

Our previous analysis showed that token unlocks of less than 10% of the total supply have not significantly affected the price.

BCH Gives Bullish Signal at Support

The daily time frame Bitcoin Cash price chart shows a decline under a descending resistance trend line since the yearly high of $718.21 on April 5. The decrease culminated with a low of $344 on June 24.

The BCH price bounced today, on June 25, validating the $350 area as support. This is a critical support area because it has existed for 112 days. So, whether Bitcoin Cash’s price breaks down from the area or breaks out from the descending resistance trend line will be critical in determining the future trend’s direction.

The daily RSI and MACD both give bullish signals. The daily RSI has fallen into oversold territory (green circle), while the daily MACD has generated bullish divergence.

Interestingly, the last time this occurred, Bitcoin Cash was also at a long-term horizontal support level. At that time, the BCH price broke out from a descending resistance trendline, initiating a rise toward the yearly high.

So, a similar movement could follow this time, which a breakout from the resistance trend line will confirm.

What’s Next for the BCH Price?

Since the daily time frame price chart and indicator readings give a bullish outlook, the wave count can determine the potential targets for the ensuing upward movement.

The most likely count implies the Bitcoin Cash price is completing wave four of a five-wave upward movement (white), which started in June 2023. The defining characteristic of this movement is the breakout from an ascending parallel channel, which indicates the increase is impulsive.

A potential target for the movement’s top is between $950 and $975. The 1.61 external Fibonacci retracement of wave four creates the lower portion of this target. Giving wave five the same ratio as waves one and three gives the upper portion.

Despite this bullish outlook, falling below the wave one high (red) at $333 will put this bullish count at risk. This is because Elliott Wave rules state that wave four cannot fall into the territory of wave one.

If that happens, the expanding diagonal bullish possibility will still be at play. However, a breakdown below the channel’s support trend line at $310 will confirm the trend is not bullish.

Will BCH Fall Against BTC?

Some traders believe that BCH will fall against BTC when the release happens because users will likely swap their BCH for BTC.

However, the BCH/BTC chart is not bearish. To the contrary, the BCH price began an upward movement after falling to a new all-time low in June 2023 and reclaimed the ₿0.005 horizontal support area. Then, it validated it as support at the start of 2024 (green icon), creating an ascending support trend line.

Currently, the Bitcoin Cash price trades just above this trend line, and so does the RSI (green). So, the current conditions are ripe for a price bounce. This bullish BCH prediction will be rendered invalid with a breakdown from the trend line, which can cause a drop to ₿0.005.

Bitcoin Cash Could Have Bottomed, Mt. Gox Selling Pressure Likely Irrelevant

The Mt. Gox selling pressure is an inconsequential portion of the circulating Bitcoin Cash supply, so it is not expected to have a notable effect on the price. Furthermore, the BCH price has reclaimed a long-term support area and given a bullish signal. This is true for both the BCH/USD and BCH/BTC pairs.