Did You Catch this Bitcoin Cash (BCH) Crash Against Bitcoin (BTC)?

Jan 13, 2020 at 2:30 PM
Regardless of where you fall on the spectrum of the so-called “Big 5” including Bitcoin (BTC), Ethereum (ETC), Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH), the fact is this is where most of the liquidity in the market resides, particularly against USD and its derivatives USDT, USDC, etc.

Some traders are technically drawn to Bitcoin Cash (BCH) because it has a very wide trading range. In fact, Bitcoin Cash (BCH) is up more than 25.3% year-to-date, an astounding rise.

I’ll leave it to the Bitcoin maximalists and Bitcoin Cash maximalists to argue about which one is fundamentally better.

Our charts reveal a very clear, compelling, and technical trade, the success of which was amplified by the amount of liquidity in this cross rate.

I have drawn a 15-minute chart of Bitcoin Cash/ Bitcoin (BCH/ BTC) and I can see there is a depreciating range from 0.03373 to 0.03258. 

I can observe that the market then appreciated to the 0.03346 level (identified by the red down arrow), right around the 0.0334586 level that represents the 76.4% retracement of the depreciating range.  Look how closely it tested this level – it was almost a perfect test.

I can see that the market then depreciated as low as the 0.03275 level, and found technical support around the 0.0328514 area that represents the 23.6% retracement of the depreciating range (identified by the blue up arrow).  Look how many times the market found some short-term technical support around that 23.6% retracement level. This is where many traders were covering their shorts.

I can observe that the 55-bar Simple Moving Average was indicating just above the 0.038514 level, and this is likely where many traders were reducing their exposure to BCH/BTC.

I have plotted RSI on the sub-graph and I can observe that the slope of RSI (14) and RSI Average (3) turned negative after the market traded as high as the 0.03346 level.  This was a very good signal to short the market. I can also see that RSI Average (3) continues to indicate above RSI (14), suggesting price depreciation may continue.

I have also plotted Slow Stochastics on the sub-graph and I can observe that the slope of Stochastics K bearishly turned negative after the market traded as high as the 0.03346 level.  This was also a strong short entry signal. I can also observe that Stochastics D then bearishly crossed above Stochastics K and that the slopes of both Stochastics D and Stochastics K remain negative, suggesting continued price depreciation is likely.

You don’t have to have a fundamental dog in the Big 5 circle.  You just need it to bark loudly when compelling trading opportunities like this emerge. 
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Jan 14, 2020 at 1:09 AM
Insightful analysis, Sally. A lot of traders stopped touching Bitcoin Cash (BCH) after the infamous hash war but there have been plenty of good opportunities lately. However, the risk of another hash war still looms over as a small group of people still has a lot of influence over BCH and therefore BCH/BTC.