Bitcoin Cash: What’s the best entry point for buyers as BCH goes on a rally

AmbcryptoPublicado em 2023-07-05Última atualização em 2023-07-05

Resumo

Even though waiting for a significant drop before buying sounds like a good plan, the majority of the market expects the same- Will the price action follow what the majority expects?

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

The price action of BCH and retracement levels lined up pretty well near the $200 mark.

Yet this could be precisely why such a retracement could be risky for the buyers.

Bitcoin Cash [BCH] embarked on a rally that measured 214% in magnitude. The bulls accomplished this feat in under two weeks. While the price action and indicators showed strong bullishness, this was not a time for FOMO.

Traders can instead look to capitalize on a retracement if the market gives one. But Fib retracement levels are a popular tool, and if the entire market is looking at certain levels for a bullish reaction, it could become easy to trap the bulls before the real move.

Will Bitcoin Cash retrace some of its vast gains?

Source: BCH/USDT on TradingView

It was very likely that BCH would retrace at least a portion of its recent gains. But how much would that be? Will the bears begin to shed all the gains from the vertical upward move? This was possible. But with Bitcoin having a bullish bias on the higher timeframes, there could be another bullish move left for BCH in the coming weeks or months.

The RSI began to form a bearish divergence while BCH fell close to 15% from the high at $329. However, the price action remained strongly bullish. The Fibonacci retracement levels were drawn after BCH flipped its structure to bullish on the 1-day timeframe.

The 50% and 61.8% retracement levels lie at $190.4 and $216.9. Interestingly, a large red candle was present in this zone as well. Formed on 25 June, this area represented a region where some lower timeframe consolidation occurred before the explosive surge past $300.

Therefore, a revisit to this area could offer a buying opportunity. Bulls can look for a positive reaction from the $190-$220 region and another bullish structure break before looking to buy BCH- but must beware of becoming liquidity before a deeper retracement.

The rapid fall in the mean coin age could mean trouble

Source: Santiment

While the OBV shot upward to show strong buying pressure, the mean coin age was not as bullish. The metric began to decline even as Bitcoin Cash rocketed higher on the chart. The mean coin age was already in a downtrend in May and fell sharply as the asset embarked on its rally.

This showed a heightened movement of BCH between addresses, a sign that likely points toward increased selling. The MVRV ratio was also at a nearly two-year high. Taken together they suggested that sellers could force Bitcoin Cash lower once more.

A spike in the dormant circulation coincided with the surge to $329, which suggested a flurry of selling activity could have taken place then.

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