New Set of Highlights for Bitcoin Cash – Where’s the Risk to Reward?

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

Bitcoin has climbed past the $39.8k and the $42k levels in the past 48 hours. This was significant especially as $42k has been a level to watch for the past few weeks. Bitcoin’s price action, ergo, is also likely to see altcoins turn a profit and Bitcoin Cash could follow in its footsteps.

BCH-1 Hour Chart

Source: BCH/USDT on TradingView

In the third week of January, Bitcoin Cash tried to find some support around the USD 341 (red box) area. However, it was quickly pushed down. Since then, this area has acted as a solid resistance to the price move north.

In February, the bulls managed to push the price towards USD 361. Unfortunately, they were unable to hold the $341 area as a support.

At the time of writing, BCH appeared to have hit a wall of selling pressure in the same area. However, this could only be a short-term setback for BCH. The $307 level represents the mid-month-old range for BCH from $345 to $270.

Therefore, a drop to the $300-$310 area would be a buying opportunity. Rather, a break past the range highs and a retest of the same at $340 would also be a buying opportunity.

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Source: BCH/USDT on TradingView

The Awesome Oscillator showed strong bullish momentum in response to BCH’s gains from the $302 support level. The CDV also showed that last week’s buying volume has outpaced the selling volume.

The Directional Movement Index also showed a strong upward trend in response to the move from BCH to USD 344.

Conclusion

The range has not yet been broken for BCH. This means that market participants can wait for the medium-term reaction to establish a short-term bias. Bitcoin looked bullish in the short term and that could also bring BCH register gains as Bitcoin Cash has a 30-day correlation of 0.96 with Bitcoin.

Therefore, $318 and $307 may be levels that represent a good risk-to-reward for a short-term buyer.

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