Bitcoin Cash declined from $292.25 to $207.30 between September 2 to September 23, according to analysis. Following that, the price recovered till October 15, hitting the $262.65 resistance line. Since then, this Bitcoin fork has dropped to $249 and is trapped between the 100-day SMA ($253) and 200-day SMA ($246). The MACD also indicates decreasing bullish market momentum, which doesn’t bode well for the buyers.
There are three healthy support levels at the 200-day SMA ($246), $239 and the 50-day SMA ($232.50). These look strong enough to absorb an immense amount of selling pressure, capping off the downside at $232.50. A break below these support walls will trigger a drop to $220.
To add further credence to our bearish outlook, we observe the number of addresses entering the network per day. This is a negative sign as declining network growth is usually indicative of a future slumping price. The number of new addresses entering the system reached a high of 29,230 on October 14, over the last month. Since then, the number has dropped to only 18,700, at the time of writing.
Can the bulls take back control?
So, while the outlook for now looks pretty gloomy, the buyers can turn this narrative around by conquering two particular levels. First, it has to to cross over the 100-day SMA ($253) and then take over the $262.65 resistance line. By taking control of these resistance levels, Bitcoin Cash should reach $300.
It seems like the whales have been buying the dip. As per Santiment, the number of addresses holding 10,000-100,000 tokens went up from 166 to167 over the last two days. While this may sound negligible, remember that these addresses hold hundreds of thousands of dollars worth of BCH.
Key price levels to watch in Bitcoin Cash analysis
The downside is capped by the 200-day SMA ($246), $239 and the 50-day SMA ($232.50) for the Bitcoin Cash bears. These levels are strong enough to attract immense amounts of sell pressure.
The most urgent task for bulls is to flip the 100-day SMA ($253) from resistance to support. A break above this resistance level should give them enough momentum to aim for the $262.65 resistance.