Bitcoin Cash Bull Failures Could See Traders Move to Bitcoin
Bitcoin (BTC) may be down 40 percent on a year-to-date basis, but the cryptocurrency still looks set to outshine its rival bitcoin cash (BCH) in the short-term, the technical charts indicate.
As of writing, the bitcoin cash/bitcoin (BCH/BTC) exchange rate is seen a 0.1104 BTC on Bitfinex – the lowest level since March 9. BCH had dropped to a low of 0.10723 BTC on March 7, but defended the falling channel support, as seen on the chart below.
In the subsequent days, the BCH/BTC ratio has regained poise, but the demand for BCH, the world’s fourth-largest cryptocurrency by market capitalization, was not strong enough to push through the falling channel hurdle.
The corrective rally ran out of steam at the three-week high of 0.12489 BTC on March 17. Since then, the bitcoin cash bulls have made numerous attempts to scale the falling channel resistance. However, as the chart shows, the resistance proved a tough nut to crack and the BCH/BTC pair ended up creating lower highs along the channel resistance.
Further, BCH/BTC created a “gravestone” doji-like pattern yesterday, signaling that the bulls are leaving the market.
The momentum studies are biased to the bears too, with the 5-day moving average (MA) and 10-day MA both heading south currently. The relative strength index (RSI) has also rolled over into the bearish territory (below 50.00), indicating scope for a further decline in BCH’s BTC-denominated exchange rate.
The pair looks set to test 0.10723 BTC (March 7 low) and may drop to the falling channel support, currently seen at 0.1018 BTC, meaning traders are likely to jump ship from bitcoin cash to bitcoin.
Only a high volume break above the falling channel resistance would signal a bearish-to-bullish trend change.
Business people crossing image via Shutterstock