Bitcoin Cash’s (BCH) $340 Support Under Threat After Price Breakout Fades

Key Takeaways

• Bitcoin Cash (BCH) created its first lower high this cycle.
• The BCH price trades above the $300 horizontal support.
• Can the BCH price bounce, or will it break down this cycle?
• Interested in buying or selling BITCOIN CASH coin? Read our review of the best exchanges to buy and sell BITCOIN CASH.

Bitcoin Cash reached its cycle high in March 2024 and has fallen since. The price created a lower high in December, accelerating the rate of decrease.

Even though the BCH price has fallen by nearly 50% since then, it still trades above its main horizontal support area at $340.

This support is critical for future trends since the breakdown below confirms that BCH is in a bear market.

With that in mind, let’s analyze the price action and see if a breakdown or bounce is more likely.

BCH Price Breaks Down

The weekly time frame Bitcoin Cash chart shows that the price broke down from an ascending support trend line at the start of February. Before the breakdown, the trend line had existed for 539 days.

While BCH broke down from this diagonal support, it prevented a breakdown from the $305 horizontal support area. BCH bounced but failed to reclaim the ascending support trend line, creating a long upper wick (red icon).

So, whether BCH breaks down below $305 or reclaims the ascending support trend line can determine the future trend’s direction.

Technical indicators support a breakdown. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are falling. The RSI is below 50, while the MACD is negative, signaling a bearish trend.

So, the weekly chart gives a bearish BCH prediction. A decisive close below $305 can trigger a decline to the next support at $195.

Bounce or Breakdown?

BCH’s daily time frame gives mixed signals. BCH broke out from a descending resistance trend line after the RSI and MACD generated bullish divergences (orange).

However, the Bitcoin Cash price failed to sustain its increase, getting rejected from the 0.382 Fibonacci retracement resistance at $414. This created an upward A-B-C structure (black), which could continue the bearish trend.

Want to add BITCOIN CASH to your portfolio? Discover the leading platforms for buying and selling BITCOIN CASH on our exchange review page.

While BCH still trades above the breakout level, it risks losing the minor support at $440, triggering a deeper decline. In the context of the long-term count, the increase could be wave X in a W-X-Y correction (red).

If the count is accurate, the BCH price has started wave Y. If it has 0.618 times the length of wave W, the BCH price will reach a low of $192, aligning with the long-term support at $195.

Alternatively, reclaiming the long-term ascending support trend line will mean the BCH trend is still bullish. Currently, this scenario is less likely.

Breakdown Incoming

The BCH price prevented a breakdown by bouncing at the $340 horizontal support area. However, the failure to reclaim its long-term support trend line points to a bearish trend.

As a result, a decisive weekly close below $340 can trigger a significant downward movement that takes the BCH price to a new yearly low.