Price behavior in Bitcoin Cash is showing a reversal from the prior trends posted during the early parts of November. Against the U.S. dollar Bitcoin Cash has rallied sharply since the beginning of the month, and BCH/USD is currently posting a corrective move as a means to work off its overbought price conditions. All of this activity has increased volatility in the instrument but we are currently coming into some important technical levels which can be used for new positioning stances in the sessions ahead.
These latest impulse moves in BCH/USD have sent the pair back into Fibonacci support on the 2-hour charts. If we measure from the lows from late October to the highs from November 8th (at 646.80), we can see the 61.8% Fibonacci retracement comes in close proximity to historical support levels (at 503.10). The confluence of historical support and Fibonacci retracement readings strengthens the level of importance for the 503.10 price zone. This suggests that we can use this level as tradable support in the establishment of new positioning stances.
Given the extent of the market’s recent price moves, short-term swing traders may elect to stop out the position if these Fibonacci support levels are broken. A downside violation of 503.10 suggests a full retracement of the prior bull wave and targets a move back into support at 410.10. With the two-way activity which has defined sentiment for this month, it makes sense to be aggressive with stop losses and take profit levels over the next few sessions. Prices are currently caught within the moving average cluster, and indicator readings are almost exactly at mid-range (which softens the bullish bias).[fx-article-ad]