The Bitcoin Cash price continues to bleed lower, but crucially one technical indicator suggests BCH may soon reverse higher.
Bitcoin Cash (BCH) is trading at $433.45, down $4.75 (-1.09%).
BCH has lost around 12.5% over the last seven days, which is certainly not as bad as some other blue-chip cryptocurrencies. Bitcoin cash is currently ranked as the 10th-largest crypto and has a market cap of just over $8 billion, only marginally higher than 13th-placed Litecoin’s market cap of $7.9b.
Clearly, over the last two months, the excitement the crypto space enjoyed earlier in 2021 has firmly evaporated. Volumes have dried up, prices are a far cry from April and May’s heady levels, and each reactive bounce has run into selling at lower prices.
But if like me, you believe the market will eventually prevail, at some stage, assets will get to an attractive price. And it’s often a lucrative strategy to buy when everybody else is selling.
Therefore, the current weakness in the Bitcoin Cash price may soon present an opportunity.
The daily chart illustrates BCH’s two-month downtrend following the knee-jerk bounce from the May crypto crash low.
Notably, the price is finding a strong level of support between $382 and $439. Although currently, BCH is making light work of the first resistance, the $382 level should prove more robust.
What’s interesting to me is the Relative Strength Indicator (RSI). The current reading of 33.06 is close to signalling that Bitcoin cash is entering oversold territory. Furthermore, historically, readings close to 30.00 have preceded a material upswing in price. Now, this is not to say that BCH is at the bottom. But it is a warning that selling at this level is a risky business.
Of course, Bitcoin Cash relies on optimism returning to the market before a sustained rally can commence. However, after losing 77% in value since May, I feel the worst of it must surely be in the rearview mirror.
Although, should Bitcoin and Ethereum collapse, BCH will follow, just likely to a lesser degree. And therefore, I would prefer to see the price clear the descending trend line at $485 to confirm a change in trend.
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