Bitcoin Cash: This resistance trifecta could spoil chances of a 20% rally

Bitcoin Cash: This resistance trifecta could spoil chances of a 20% rally

Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

Underpinned by a risk-on broader market and Bitcoin’s succession to new heights, smaller rival Bitcoin Cash has maintained a consistent uptrend over the last 3 days. In fact, BCH recorded a percentage increase of 16% during this period, lining up six consecutive green candles for only the second time in over a month.

There was even the potential for another 20% should BCH close above the confluence of its value high zone, 61.8% Fibonacci level, and an upper sloping trendline. However, an overbought RSI and a solid resistance zone could weigh heavily on the digital asset’s attempt at an extended rally.

Bitcoin Cash 4-hour Chart

Bitcoin Cash’s parabolic rise to a 2-month high of $670 occurred between a lower trendline (yellow), one which extended from its mid-August peak and an upper trendline (yellow) which extended all the way from the November 2020 highs of $320.

At press time, BCH was trading at the apex of this upper trendline, which also clashed with the Visible Range’s developing value area and 61.8% Fibonacci level.

A convincing close above this strong confluence can allow BCH to register another 20% jump, pushing its price to its 138.2% Fibonacci Extension and its September high of $784. Bullish traders can be optimistic after a variety of buy signals along the Directional Movement Index and the MACD. Both these indicators registered bullish crossovers and an ADX reading of 33 presents a strong directional trend.

On the flip side, it’s worth noting that the 4-hour and 12-hour RSIs were at overbought levels. If investors do decide to pull the plug, BCH will fall short of its goal and shift to near-term support levels of $650, $631.2, and $607. A deeper sell-off might even see BCH tag its lower trendline once again, possibly around the $570-mark.

Conclusion

Following a massive jump, Bitcoin Cash could ease at a few defensive lines should investors choose to cash out. In case BCH fails to register a decisive close above the so-called “resistance trifecta,” focus will shift towards $650, $631.2, and $607.

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