Bitcoin Cash Price Analysis: BCH Bear Flag Triggers 25% Breakdown toward $390

Last Updated July 23rd 2021
2 Min Read
    • Bitcoin Cash validates the formation of a bear flag pattern as losses under $400 loom.
      • Bulls anticipate support at $455 to renew the uptrend above $500.
      • The profit or loss ratio by Santiment shows that Bitcoin Cash in the buy zone.

Bitcoin Cash cracked the hurdle at $500 earlier this week but bowed to the selling pressure at $530. A break above this level would have catapulted BCH to price levels around $650 (robust resistance zone).

Nonetheless, a correction appeared on Wednesday, forcing Bitcoin Cash to explore levels under $500. At the time of writing, BCH trades at $488 amid a growing bearish outlook. On the downside, support is expected at $455, but if the overhead pressure soars, BCH will drop further.

Bitcoin Cash bear flag pattern breakdown 

A bear flag pattern occurs after a significant downward price action followed by a consolidation period. The consolidation forms the flag, while the massive breakdown is the flagpole. Realize that this pattern is highly bearish. Hence, Bitcoin Cash will likely continue with the preceding downtrend.

The bearish flag is validated when its height is half that of the flag pole. Moreover, the price must break the pattern’s support, as shown on Bitcoin Cash’s chart. As the breakout confirms, the volume spikes, which speeds the downtrend. As long as the technical picture remains unchanged, Bitcoin Cash will possibly plunge 25% to test lows under $400, but precisely $390.

BCH/USD 12-hour chart

 BCH/USD 12-hour chart 070821

For now, bears are in control, and their aggressiveness is confirmed by the Relative Strength Index (RSI). This tool follows the trend of an asset and calculates its strength. A sharp drop toward the oversold region (below 30) implies that selling pressure is intensifying. The RSI also shows when the asset is overbought or oversold, allowing traders to decide on entry and exit positions.

Looking at the other side of the fence

Bitcoin Cash is still in the buy zone despite the resistance at $530 and the retreat under $500. The market value realized value (MVRV) metric by Santiment affirms this narrative. At the moment, the ratio holds at -5.6%, inferring that most BCH holders are still in losses.

Bitcoin Cash MVRV ratio

 BCH/USD santiment chart 070821

Note that investors are unlikely to sell when the MVRV ratio is around or below zero. Hence, they are unlikely to sell but keep anticipating an uptick in price. As buying pressure rises, Bitcoin Cash is bound to soar to higher levels.