Bitcoin Cash Price Prediction 2018: Indications Suggest BCH Could Prevail

bitcoin cash price prediction
Credits: istock.com/Grigorev_Vladimir

Bitcoin Cash: Creating a Bitcoin Cash Price Prediction 2018 using a Technical Perspective

2018 began on a high note as cryptocurrencies went on an absolute tear; cryptocurrencies were putting up incredible returns and the entire complex reached a market cap of $830.0 billion on January 7, 2018. This move toward higher valuations came to screeching halt as rumors began swirling that a potential South Korean ban on cryptocurrency trading was going to be imposed by the South Korean government.

South Korea is a major player in the cryptocurrency trading market; it is estimated that South Korean traders account for approximately 10% of all trading volume. The notion of a ban would certainly impact crypto prices and this is why, when this alleged news hit the news wires, it sent shivers down the spines of investors and opened up a floodgate of selling pressure. The entire cryptocurrency complex sold off as result.

Media outlets were quick to jump on this decline. The headlines surrounding this subject are currently suggesting that the bubble has finally burst and pundits are coming out of the woodwork providing a Bitcoin price forecast claiming that this decline is the beginning of things to come.

Normally, I would respect such claims because I have been a skeptic of cryptocurrencies—and I probably still am—but what I like and respect about this new asset class is their impeccable price charts. Specifically, their adherence to the rules set out by technical analysis.

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I need to reiterate that in my career, I can’t recall coming across an entire sector with such attractive and compelling price charts. The price action on these price charts is why I currently believe that we have not yet witnessed the peak in this asset class and that higher prices are yet to come.

For those like myself, who still believe that higher cryptocurrency prices are on the horizon, this selling event has created an opportunity in many names, and it is why I am focusing on Bitcoin Cash. I will walk through the Bitcoin Cash price history from a technical perspective by analyzing the BCH price chart and I outline a potential a Bitcoin cash price prediction for 2018, and why I believe that higher prices are likely.

BCH Crash in Jan 2018

The selling pressure that struck BCH prices in January exasperated a sell-off that began in December after Bitcoin Cash prices peaked on December 20, 2017 at $4,650. I have reason to believe that this selling pressure is abating because the BCH price has reached an important and influential level of price support that is currently being supported by two distinct metrics.

The first metric outlining price support is highlighted on the following BCH price chart.

bitcoin price chart

Chart courtesy of TradingView.com

This Bitcoin Cash price chart illustrates that in November 2017, the BCH price hit a temporary level of price resistance at approximately $1,700. This price point contained the Bitcoin Cash price from advancing and only after its third attempt at this level of price resistance was resistance finally broken. The break above resistance resulted in an accelerated move toward higher BCH prices.

The current sell-off has caused the price to correct and as a result, BCH prices have returned to test this level of price resistance from above. Returning to test a previous level of resistance is not uncommon and serves to establish that this price point that once acted as a level of price resistance is now a new level of price support. Once support is established, the price can regain its footing and higher prices can once again prevail.

The second metric outlining price support is highlighted on the following Bitcoin Cash price chart.

Bitcoin Cash price chart

Chart courtesy of TradingView.com

This BCH price chart has been annotated using the Fibonacci retracement numbers.

The theory behind these numbers is that the price of an asset will retrace approximately 50%-62% of the primary move that preceded it before the predominant trend reasserts itself. Fibonacci number can be used to speculate on on price and BCH predictions.

Currently, BCH prices are finding support at the 62% retirement level, which stands at $1,790. Given the magnitude of the correction, I would not and could not rule out the possibility that a quick drop to the 79% retracement level at $1,130 may occur in the coming weeks.

Corrections such at this one purge the market of speculators and allow stronger hands to take their place. Corrections are a necessary part of every bullish trend and, therefore, when they do occur, they should be embraced rather than feared because they restore health to the overall trend. I firmly believe that when this correction runs its course, higher Bitcoin Cash prices will follow.

Bitcoin Cash Price Prediction for 2018

I believe that this run toward higher prices will begin when the following price pattern highlighted on the following BCH price chart is resolved.

btc price chart

Chart courtesy of TradingView.com

This BCH price chart illustrates that the current correction has been within the confines of a descending channel. A descending channel is a bearish technical price pattern that is characterized by a series of lower lows and lower highs. If you are unaware, this is the quintessential description that describes a bearish trend.

Capturing this pattern is accomplished by using two downward-sloping trend lines that were created by connecting the series of lower highs and lower lows. These trend lines act as levels of price support and price resistance. As long as the BCH price is contained within the pattern, lower prices will prevail.

I have the inclination to believe that resistance outlined by this ascending channel be will be broken, meaning that this pattern will resolve itself in a bullish manner. Such a bullish feat will most likely coincide with a bullish signal from the moving average convergence/divergence (MACD) indicator.

MACD is a simple yet effective momentum indicator used to determine whether bullish or bearish momentum is influencing the price action using the crossing of a signal line. A bullish MACD cross suggests that bullish momentum is influencing the price action and, therefore, the price has a tendency to appreciate. A bearish MACD cross suggests the bearish momentum is influencing the price action and, therefore, the price has a tendency to depreciate.

The MACD indicator is currently in bearish alignment, supporting the notion of lower prices. I will be looking for a bullish MACD cross, which should coincide with a break above resistance, which will suggest that higher Bitcoin Cash prices are on the horizon.

Bitcoin Cash Potential

When the descending channel is resolved and a bullish MACD cross is generated, I will be looking for higher BCH prices to follow, and the following Bitcoin Cash price chart illustrates where I believe the price will go.

Bitcoin Cash Potential

Chart courtesy of TradingView.com

This BCH price chart illustrates a level of price resistance that was established by connecting a series of higher highs.

This level of resistance was first established in August 2017, and every subsequent high has found resistance at this trend line. I have reason to believe that once Bitcoin prices start rising again, this trend line will be tested.

This trend line currently resides at $7,000 and due to its upward-sloping nature, I could easily suggest that once another advance begins, the BCH future price will sure get north of this price point. From current levels, this level of price resistance suggests that there is potential for quite a substantial moves towards higher prices.

Why the BCH Price Is Rising

From a simple standpoint, the Bitcoin Cash price is rising because Bitcoin prices and the entire cryptocurrency complex is rising, but there is more to it.

When we compare Bitcoin vs Bitcoin Cash, there are fundamental reasons why Bitcoin Cash has more utility than Bitcoin at this current time. For instance, Bitcoin has a maximum limit of 1MB of data per block and this has caused scalability issues. Bitcoin Cash follows the original vision of Bitcoin but has implemented a variable block size limit. Defaulted at 8MB, which is 8-times the size, it eliminates much of these issues.

Bitcoin Cash is an alternative to Bitcoin, and some of the perks are lower fees and faster confirmations. This means that BCH can be used as a prominent network for business-to-business and peer-to-peer transactions. This is why I believe that Bitcoin Cash should be appreciating on relative basis compared to Bitcoin.

Analyst Take

My Bitcoin cash price prediction for 2018 is that the current sell-off in Bitcoin Cash is just a correction in a predominantly bullish trend and that higher BCH prices will prevail. This view was generated using technical analysis and, therefore, it was based on the price action and indications on the BCH price chart history. Therefore, until there are indications suggesting otherwise, I will continue to believe that higher prices are yet to come.