The savage declines of September are back in crypto markets as most major cryptocurrencies are down by about 5% on the day at the time of writing. Bitcoin Cash (BCHUSD), just slid below last week’s low of $207.6, and the move lower appears to be a resumption of the significant decline that started from the $516 level in June. Even if today’s bearish attack is adverted, the trend in Bitcoin Cash (BCH) will be bearish below the October 9 high of $243.8.
If we take more data into account, the price created a major head and shoulders pattern between April to September, and on September 24, the pattern was triggered as the price traded below the neckline of the pattern. The neckline is drawn via the April, July, and August lows, and the percentage difference between the neckline and the “head” of the pattern on June 24 was 52%. From the breakout point on September 24, the pattern is suggesting that Bitcoin Cash could decline to $140 per coin to reach the pattern target.
To end the bearish trend, the price needs to trade above the October 9 high.
In the short-term, the trend will remain bullish as long we trade above the August 2 low of 1429.77. The price is about 60 dollars from the low, and about 54 dollars from the next major targets, hence the risk-reward ratio for a fresh long position is poor. However, if the price corrects 50% of the rally from the August 2, and thereby reaches 1461 level, the risk-reward ratio will improve to 2.54 times the risk.