Bitcoin Cash [BCH] has been trading within a range for just over two years. Since April 2024, the once-prominent altcoin has been constrained to within the $272-$684 range.
This range is massive in both time and size, giving swing traders many more opportunities to enter the market with conviction than lower timeframe ranges might.
A month ago, AMBCrypto reported that BCH was likely to continue its downtrend after revisiting the $480-$500 magnetic zone of short liquidations.
This expectation has come to pass. The $460 short-term support zone, once ceded to the sellers, quickly gave way to a 25.16% Bitcoin Cash drop from $465 (bearish retest) to $348.3.
Has the bearish impulse move ended, or should traders expect further losses?
Technical indicators suggest an overextended market
The biggest sign that the impulse move downward might be over was the high-volume slide to $348, followed by a lower-timeframe bounce.
The large downward candlewick on Monday, the 18th of May, told a story of an overextended price move.
The RSI was at 26, within the oversold territory, while the Stochastic RSI appeared to form a bullish crossover. Together, they signaled a potential short-term bounce.
The Fibonacci retracement levels (cyan) were plotted using this impulse bearish move. A bounce to $418 is likely, though it can extend as high as $459 and the $489 swing high.
Therefore, traders can look to utilize a bounce to these levels to look for shorting opportunities. It must be noted that a retest of the key Fibonacci levels is not an automatic sell signal.
An internal structural shift on the lower timeframe price chart, such as the 1-hour, can be used to increase the odds of a successful trade.
It is also possible that BCH bears will not allow a sizeable bounce. Depending on the wider market sentiment in the coming days, a bounce might struggle to clear the $400 area before falling to make new lows.
Traders should avoid FOMO and have clear rules to follow before entering. Rather than buying the bounce, swing traders might find a more feasible opportunity in selling the bounce.
Final Summary
- The Bitcoin Cash rejection at $465 resulted in a 25% price slide that reached a swing low of $348.
- The current bounce is just a relief rally, and the trend continues to favor the sellers.