Bitcoin Cash was previously trending lower in a descending channel on its 1-hour time frame but is breaking past the top. This suggests that a reversal may be in order, but technical indicators have yet to show confirmation.
For one, the 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is still more likely to resume than to reverse. However, the price has broken above the 100 SMA dynamic inflection point and looks poised to bust through the 200 SMA dynamic resistance as well.
If so, the price could complete an inverse head and shoulders pattern, possibly resulting in a test of the neckline at $180 and a rally that lasts the same height as the chart formation. RSI is still heading higher to signal the presence of bullish momentum while stochastic is also pointing up so Bitcoin Cash might follow suit.
Bitcoin Cash looks off to a promising start for the year after the huge mess caused by the mining war late last year. It appears that a version has been able to gain consensus support from exchanges and the community, removing a bit of uncertainty that has weighed heavily on its price during the split.
Looking ahead, though, similar challenges could still pop up for Bitcoin Cash down the line, which might be discouraging for investors to place bets on this particular asset. Still, the improvements on the current version could prevent further mining wars from happening and render this coin more stable.
Of course, much of these trends could hinge on the prevailing sentiment in the industry, especially this early in the year. There is a lot of expectation on institutional investment that could support volumes and activity, so evidence of this taking place could usher in a much-needed respite from the declines.
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