Bitcoin Cash: how to identify the potential entry point for investors?

Disclaimer: The findings of the following analysis are the only opinions of the writer and should not be considered investment advice

Since November 9, Bitcoin Cash (BCH) has fallen sharply in a down-channel (white). For the most part, the 20 EMA (red) stood as a solid resistance. Although it broke out of the pattern, BCH struggled to find a sustainable close above the 20 EMA.

Going forward, a break above its long-term Point of Control (POC, red) would position BCH to test the $319-$326 range before conforming to its long-term downward trend. As of going to press, BCH was trading at $284.4.

Bitcoin Cash Daily Chart

Source: TradingView, BCH/USDT

The alt has lost more than 64% of its value in the past 11 weeks, reaching its 13-month low on January 24. The bulls finally halted the downturn by entering the $275 mark 15-month support. Consequently, the bulls gained enough momentum to break out of the pattern but struggled to overpower the 50 EMA (cyan).

Long-term bearish trends were visibly predominant as the price hovered near the lower band of the Bollinger Bands (BB) during this phase. After a recent bearish divergence with its RSI, BCH again tested the $275 support coinciding with the BB’s lower band.

Now, assuming the historical tendencies to maintain the immediate support are intact, BCH will take a closer look at a test of its POC. After remaining in a tight phase around $290, the bulls should try to reclaim the 20 EMA as a support.

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Source: TradingView, BCH/USDT

The RSI has marked higher dips in the past two weeks, diverging from the price action. Thus, a higher close of the March 8 candlestick would confirm the bullish divergence and recovery opportunities in the coming days.

Interestingly, the -DI appeared to be reversing from its resistance and keeping the recovery chances alive. The OBV also followed in the footsteps of the RSI as it reaffirmed a bullish divergence.

Conclusion

Given the differences with its technical indicators, BCH has significant recovery opportunities in the coming days. A lock above the POC could create a potential entry point. But any drop below its immediate support would add fuel to its existing bearish strength.

That said, BCH shares a 91% 30-day correlation with the king coin. So keeping an eye on Bitcoin’s movement would be vital in making the right decision.

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