Bitcoin Cash appears prime for more losses as it formed a head and shoulders pattern, a classic reversal formation, on its 1-hour time frame. Price has yet to break below the neckline around $520 to confirm that a selloff is underway.
The 100 SMA is just starting to cross below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, there’s a strong chance for the downtrend to gain traction, especially since the price is below these dynamic inflection points. The chart pattern spans $520 to around $650, so the resulting drop could be of the same height.
However, Stochastic is pointing up to signal that buyers are still in control of price action and could push for gains. The oscillator has plenty of room to climb before reaching the overbought zone to reflect bullish exhaustion. RSI is also turning higher to signal a return in buying momentum.
Bitcoin Cash has been on shaky footing in the week leading up to its hard fork as the community doesn’t appear to have reached a consensus on the version yet. A pre-fork run conducted by Poloniex suggested that Bitcoin ABC might be the preferred version but there’s also evidence to suggest that Bitcoin SV might win out.
According to Roger Ver, all parties in contention agree that BCH should be used as a form of “digital cash” before later on clarifying that it only comes down to “order of operations” or when the upgrade from 32MB to 128MB blocks will happen.
nChain, a blockchain group led by Craig Wright is running its own upgrade and raise the block size to 128 MB. This hard fork is due on November 15 and the lack of any clarity could lead investors to keep liquidating their Bitcoin Cash holdings in the days ahead.
Images courtesy of TradingView
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Source: Live Bitcoin News