Another day, another crypto market price drop, and another $900+ million in liquidations in the derivatives market. Unlike the previous weekend’s mass liquidations, ZCash [ZEC] bulls were unable to shrug this hit off.
Since the 25th of May, the privacy altcoin has lost just over 20%. AMBCrypto had reported earlier this week that ZEC had accomplished a bullish breakout from a local range.
Since then, the market-wide selling pressure has forced ZEC back into the range.
Bitcoin [BTC] was also down nearly 5% since Monday, helping explain the ZEC pullback. Despite the pace of ZEC’s losses, there’s reason to believe that the recent ZCash drop was just that—a pullback.
The ZCash buying opportunity
The recent AMBCrypto report had taken a bullish stance on the privacy token and noted that $486 was the invalidation level for this bias. This idea still held. The recent losses have pulled ZEC to a key Fibonacci retracement level at $530.
The closer ZCash retreated to the $486 swing low, the more bulls were at risk from the bears. The A/D indicator signaled that sellers have been in control over the past week.
Meanwhile, the MFI on this timeframe was at 10.35, a sign that the asset was heavily oversold.
It presented a good risk-to-reward buying opportunity but also came with a clear sign of where to exit the trade.
Given the wider market sentiment and Bitcoin’s bearish shift, it is possible that ZEC is forced to shed more in the coming weeks, even as it retains its higher timeframe bullish structure.
The 1-month liquidation heatmap revealed clusters of liquidations from $520 to $470. These magnetic zones would likely be revisited soon.
However, swing traders and investors need to remain patient. The market is about to make its decision and reveal its hand. Until a breakdown below $486 comes about, traders can await a lower timeframe bullish shift to buy ZEC.
Final Summary
- The recent days saw ZCash shed just over 20% since the 25th of May.
- Despite the swift losses, the ZEC short-term outlook remains bullish unless $486 is breached.