Bitcoin Cash (BCH) Price Analysis: Support Holding Ahead of Hard Fork
Bitcoin Cash continues to hover around the Fib retracement levels while traders await the outcome of the hard fork. By the looks of it, there is still no consensus in the community as a near 50-50 split on the versions is eyed.
On the 4-hour time frame, the 100 SMA is above the longer-term 200 SMA to indicate that the path of least resistance is to the upside. In other words, the uptrend is more likely to resume than to reverse. After all, Bitcoin Cash recently formed a double bottom reversal pattern and was able to break above the neckline.
Besides, the 100 SMA also seems to be holding as dynamic support around the 61.8% Fib and $500 handle. A larger dip could test the 200 SMA dynamic inflection point, but a break below this could mean a move back to the swing low or lower.
Stochastic appears ready to climb after dipping into the oversold region, but there are signs of hesitation as well. RSI is turning higher even without hitting the oversold territory, suggesting that buyers are eager to return. In that case, Bitcoin Cash could recover to the swing high around $650.
Market analysts seem to be projecting a larger probability of a selloff following the hard fork than a strong bounce. Based on data Bitfinex, there are currently 89,457 open BCH short positions and 53,322 open longs. The expected outcome is that BCH will split into two cryptocurrencies: Bitcoin ABC and Bitcoin SV.
Some say that the recent bounce took place merely due to traders taking advantage of “free coins” that could be a potential result, but others believe that a “post-fork” drop is a more likely outcome. Still, the large amount of short orders suggests that a short squeeze might also be possible.