Bitcoin Cash looks eager to resume its selloff even without hitting the descending trend line connecting the highs on its 4-hour chart. Price could be aiming for the next downside targets marked by the Fibonacci extension tool.
The 38.2% extension lines up with the swing low at $464.30 then the 50% extension is at $417.60. The 61.8% extension is at $370.90 and the 78.6% extension is just above the $300 level. Stronger selling pressure could take it down to the full extension at $219.60.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. This means that the downtrend is more likely to resume than to reverse. The gap between the moving averages is widening to reflect stronger selling momentum and the 100 SMA already held as dynamic resistance.
RSI is pointing down and moving south so Bitcoin Cash could follow suit while sellers remain in control. Stochastic is also moving down to show that bears have the upper hand, but the oscillators are nearing oversold levels to signal exhaustion. Turning back up could bring buyers in and still spur a larger correction. Price hasn’t formed new lows yet, which means that the retracement could still be in play.
The line in the sand for the downtrend might be the 200 SMA dynamic inflection point just past the swing high of $615. A move beyond that level could confirm that bulls are charging and a reversal is happening.
Bitcoin Cash has an upcoming stress test on September 1st and this could make or break the trend. The ecosystem will be put under heavy pressure to see how it performs with high transaction loads, also to help developers to prepare tools that could keep it from crashing.
The goal of the stress test is to look at the strength and reliability of the Bitcoin Cash network then make improvements from there. It has a Twitter handle @StressTestBCH and updates during the tests could push price around.
Images courtesy of TradingView