BCHUSD | A Downward Correction Rally Before Bullish MoveHi friends hope you are doing good and welcome to the new update of Bitcoin cash. After the strong best trend that was started from Feb to March 2020. The price action of the BCH completed the final bearish leg of bullish Shark pattern on the 4 day chart. And on 19th March I posted an idea on this move of Bitcoin cash. I predicted as per Fibonacci sequence of this bullish Shark the price action should move up and enter in the Fibonacci projection area of C to D leg from 0.382 to 0.786 Fib projection. And finally after mid of March the price action moved up and as per prediction it entered in this Fibonacci projection area. And so far it has produced more than 56% bullish rally.
Wedge formation and moon phases are giving bearish signals:
Now on the daily chart the price action of Bitcoin cash is moving in a wedge since March 2020. The Bitcoin cash has several touches at the support and the price action has also made several attempts for the breakout. But so far the BCH is not able to break out the resistance of this wedge. Here I have placed the moon phases indicator. On upside you can watch the full moon and on the downside the dark moon can be seen. The distance between one full moon to another full moon and from one dark moon to other dark moon is called synodic cycle that is 29.5 days long. Now after the completion of the recent synodic cycle we can see that the new full moon was appeared down than the previous full moon. And the new full moon is inside the wedge below the resistance. And the recent dark moon was appeared below the support and it down than the previous dark moon. So here the moon phases indicator is giving the bearish signal and indicating that the price action might be moved down from here. Moreover I've also placed bollinger bands indicator and we can see that the upper bands of the bollinger bands is below the resistance of the wedge pattern and the price action is not able to cross up the resistance of bollinger bands and can start another downward move up to the suppor. here I have also implemented the volume profile indicator on the complete price action moving within this pattern that is showing that trader’s interest is strong up to the support that is around $225. Therefore a possible move up to the support is expected. However we take a look at volume indicator then even though there is not a big volume but buying volume is being appeared with the continuity and consistently, therefore the buying volume can cancel these bearish signals.
Now if we take a look at the balance of power indicator then it can be clearly observed that the balance of power is equally distributed between the bears and bulls. On the chart there are 6 obvious downward moves and 6 openly upward moves by this indicator. And the price action is also following the moves of the balance of power. At this time this indicator has made its 6th upward move and the price action has reached at the resistance. Therefore we can expect the seventh downward move by this indicators.
Consistent formation of BATs:
Now let me show you the formation of different harmonic BATs with the continuity. On the daily chart the price action of BCH has completed the formation of third BAT pattern and it is forming these harmonic patterns consistently. Let’s dig these patterns out to watch the how perfectly they are formed:
After initial leg the A to B leg is retraced between 0.382 to 0.50 Fibonacci. And B to C leg is projected between 0.382 to 0.886 Fib projection of A to B leg. And the final leg has been retraced between 0.786 to 0.886 Fibonacci retracement level. And all these BATs has followed the same Fib sequence. Therefore after the completion of third bearish BAT pattern we can expect a downward move from here.
Simple moving averages and resistance of 200 SMA:
Now if we watch the simple moving averages with the time period of 25, 50, 100 and 200 then the price action has crossed up all the moving averages. But only 200 SMA is left to crossed up and if we take a closer look on the chart then it can be easily observed that since April 2020 the price action has made several attempts to break out this simple moving average but so far it is unsuccessful. And at this time the priceline of BCH is struggling at this 200 SMA resistance level again. However this time the priceline of Bitcoin cash has the support of 100 simple moving average, therefore if price action will be dropped from here then it may re-test the 100 simple moving average as a support before any other move to the upside.
Support and resistance levels:
I the month of Feb 2020 the price action was very strong bullish and reached very close to the key level resistance of $500 but unfortunately after reaching at $497 a strong bearish trend was started that leaded the priceline to the first support at $147. After getting bounced from this support level the priceline of BCH broke out the next resistance of $220 and re-tested the previous resistances as support and moved up to breakout the next resistance at $260. So far it is moving between these support and resistance levels between $220 and $260 and now it has formed a parallel channel between these levels. Once the price action will breakout this resistance then it can go to the next resistance at $304 and after breaking out $304 the next resistance would be at $355 and in case of breaking out this hurdle the key level resistance would be at$ 500. If the priceline will breakout $500 then it can reach the highest right ever in the history of Bitcoin cash very soon.
Ichimoku cloud and directional movement:
On the long-term weekly chart the Bitcoin cash is never able to cross up the ichimoku cloud since this cloud is appeared in the history of BCH as per coinbase exchange. We have witnessed several attempts since may 2019 to break out this cloud but unfortunately so far the price action is moving below the cloud. This time the cloud is turned very weak and the lagging span of the ichimoku is crossing up the candlesticks. This is the first bullish signal that we have received now we can wait for the conversion line to cross up the baseline. And once it will be happened then the ichimoku cloud will be turn bullish and it will be easy for the priceline to breakout this cloud and breaking out this cloud will become a very strong support for the price line of Bitcoin cash to start a very long term bullish rally.
If we take a look at directional movement indicator then positive directional indicator has crossed up the negative direction indicator. That is the bullish signal indicating that on the long-term the Bitcoin cash can started a bullish rally. Before this in April 2019 when the positive directional indicator crossed up the negative directional indicators then Bitcoin cash produced 330 % bullish rally. And after that in January 2020 when again +DI crossed up the –DI then the price action of Bitcoin cash started a bullish rally up to 138%. Now the wait is only for the ADX to move up to assign the power to the bulls.
Big bullish Gartley a firm signal for long term bullish move soon:
Now I would like to recall a very big bullish Gartley pattern that is formed on the monthly chart by the price action of Bitcoin cash. I also a posted this pattern in my previous post as well. After entering in the potential reversal zone now the price action is moving just above this PRZ level and it can start movement to the upside very soon. This bullish Gartley can be very helpful for the priceline to start a long term bullish move.
Conclusion:
On the daily chart the bearish signals are more than the bullish signals. Therefore we can expect a correction rally up to the support of the wedge that has been formed on the daily chart. But on the long-term chart the Bitcoin cash is turning very strong bullish specially after the completion of very big bullish Gartley pattern on the monthly chart. So the countdown for a very big upward move has begun.
Note: This idea is education purpose only and not intended to be investment advice, please seek a duly licensed professional and do you own research before any investment.
