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
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
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.