Technical analysis of BitcoinCash

TA #2: Analyzing BitcoinCash (BCH) with Basic Trading Indicators (5/02/2022)

By CryptoManthan | Coin Analysis | 4 Mar 2022


BitcoinCash is one of the earliest cryptocurrencies in the crypto space and is the successful hard fork of Bitcoin. BitcoinCash is leading the path of peer-to-peer electronic currency and is taking its slow but steady steps in the world of DeFi through smartBCH, you can read the article on bridging your BitcoinCash to smartBCH.

Now as you are somehow familiar with the BitcoinCash let us dive into the technical analysis of Bitcoin on a daily chart. As in the previous technical analysis of Crypto.com (CRO) token, we will use the same indicators in the trading setup to analyze BitcoinCash. Before going let's have an important note:

Note: The purpose of this Technical Analysis is to show the use of indicators and understand their meanings. So before making any financial decisions do your own research. Now sit back and enjoy the analysis!!

Support & Resistance Zones

Support & Resistance zones are the key zones that indicate traders that the price of a particular asset will react in some way after reaching that zones. The possible scenario or reaction of the price is that it will either respect the zones and bounce back in the opposite direction as dropping from resistance zones & bouncing back from support zones or there might be breakouts. 

This is the daily chart of BitcoinCash with Support & Resistance zones:

BCHUSD Daily Chart

Current Support Zones

Support Zone: $275 - $280

You can see in the chart above, this support zone is valid and is been tested several times in the past few days. Price is moving towards the support zone, it might have already tested or broken out at the time of reading this analysis.

Current Resistance Zones

Primary Resistance Zone: $340 - $345

Secondary Resistance Zone: $395 - $400

The primary resistance zone has been tested successfully in the last four days, after testing that zone we saw a strong rejection from there & all the daily candles are in the red, this indicates the strength of bears in that zone. The secondary resistance zone was last tested in mid-January, after that testing, we have seen a strong rejection.

What Indicators Are Indicating?

Now we have looked into the Support & Resistance zones, it's time to get into some indicators and look for their indications. Always remember that no trading indicator is perfect, you should always have more than one indicator to confirm the price actions and projected market moves. 

Smooth Moving Average (SMA200)

SMA 200 indicates the long-term trend of a particular asset. It can be used to determine the trend reversals as well as the current trend of a coin. Every trader in any type of market had been using SMA for a very long time in multiple trading setups.

You can see the chart below and a solid white line representing the SMA 200. As the price is moving below the SMA line, we can say that the overall sentiment regarding the BitcoinCash is negative and the price is in a downtrend. For a trend reversal, BitcoinCash must break above the primary resistance zone which is ~$345.

MACD (Moving Average Convergence Divergence) 

MACD is another popular trading indicator that is widely used by traders especially retail traders due to its simplicity and easy-to-understand indications. MACD can provide a piece of significant information regarding price trends.

In the case of BitcoinCash, the MACD line (blue) is crossing below the Signal line, which indicates the short-term downtrend. As we have already seen the price is about to test the nearest support zone of ~$278, the MACD crosstown is still in the emerging phase so the strength of the support zone will be tested here and then further decisions can be taken accordingly.

OBV (On-Balance-Volume)

Another simple but not widely used indicator is an On-Balance-Volume indicator. It indicates the possible difference between the volume on Up days and Down days. We can predict the strength of bears & bulls in the market with the help of OBV. 

As you can see in the chart below, the slope of the OBV line is downwards indicating the volume on down days is larger than the up days that is the bears are stronger than bulls in recent days.  

BCHUSD Daily Chart

Conclusion

The price is approaching the support zone, it has to survive there otherwise we will see another drop there. And the MACD, OBV & SMA 200 all are indicating the downward movement. Currently, the market is in uncertain condition due to the ongoing Russia Ukraine crisis, market can react to any news in any way so be careful.

Hope you found this article informative and learned the use of basic trading indicators. Do share your opinion on this analysis and your overall opinion on BitcoinCash.

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CryptoManthan
CryptoManthan

We write about trading indicators, strategies, crypto projects, and blockchain technology.


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