BCH/USD pair analysis
In past three days we have Segwit2x situation rolling. Mayor earthquake shakes Bitcoin and Bitcoin cash and also other altcoins in smaller extend. BCH take off in past week but we must look at bigger picture.
Shot after his birth BCH experience massive sales and transferring value from newly doubled coins back in main Bitcoin blockchain. In first two week first pump and dump occurs and then comes October and November where nothing much was happening. All attention was shifted over to Bitcoin and awaiting of Segwit2x hard fork to provide better transaction speed and bandwidth.
When Segwith2x fork was called off en earthquake strikes. Bitcoin crashed, transaction volume goes wild and miners are over stressed whit tons of transactions. But bump in must come out as bump out somewhere else. So speculators shift bets into BHC and BHC/USD explodes to amazing $2700 and then land over 40% lover at around $1200.
Many people consider this event ad pump and dump scenario also, but I see it as extreme volatility which is inevitable in such circumstances. In the end BHC landed almost %100 higher than where was before. All this spikes and strikes have something positive in common. BHC have solid base trend line just bellow $400. And there is a trend to establish himself as a prominent altcoin with solid code base derived from original Bitcoin idea.
RSI shows overbought state of BHC/USD pair and i recommend adjusting stop loss levels take some reasonable portion of positions as profits and wait to another opportunity.
In picture above we can see an evolution of volatility and its comedown. Bollinger band is nice indicator to measure volatility and overbought and oversold conditions of market. Bollinger band consist from moving average and two standard deviation lines. Far apart lines indicate high volatility and close together lines called Bollinger squeeze indicate low volatility quiet market. If candles break out of the Bollinger band than we have overbought or oversold market.
A wedge is forming from two trend lines indicating that some bigger moves is approaching. We must stay alerted for more signs which can indicate the direction of that move.
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Image sources: Investing.com
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