Bitcoin cash (BCH) is trading on the back foot today, with technical analysis suggesting the market risks a bearish breakdown over the weekend.

At press time, the cryptocurrency has depreciated by 7 percent in the last 24 hours, according to data source OnChinaFX. On Bitfinex, the largest market for BCH/USD trading, bitcoin cash fell to $1,479 today; its lowest level against the dollar since Jan. 17. As of writing, it is trading at $1,599.

The development follows a sharp recovery from the Jan. 17 low of $1,343, which witnessed a follow-through buying in the subsequent days. However, the move ran out of steam at a high of $2,110 on Jan. 20 and BCH turned lower again, thus creating a lower high pattern (bearish pattern) on the charts.

That said, the 7 percent drop seen today is largely in line with the weakness in other cryptocurrencies.

For instance, BCH’s rival bitcoin (BTC) has dropped by 5 percent in the last 24 hours. Further, Ripple’s XRP token and Stellar’s XLM token are down 8 percent each, while ethereum’s ETH cryptocurrency is down 2 percent.

Bitcoin cash chart

The above chart (prices as per Bitfinex) shows:

BCH is creating head and shoulders bearish reversal pattern. A close (as per UTC) below the neckline would confirm a long-term bullish-to-bearish trend change.

50-day MA has shed bullish bias (topped out).

Falling channel marked by downward sloping trendlines representing lower highs and lower lows.

The relative strength index also favors the bears.

View

Confirmation of head and shoulders breakdown (close below $1,398 – neckline support) would open doors for a drop to $1,100 (Nov. 29 low) and possibly to falling channel support seen sloping lower to $1,050 over the next few days. A violation there would expose support at $851.12 (Nov. 17 low).

Meanwhile, the 50-day MA of $2,195 could be put to test if the bulls defend the neckline support and prices quickly move above $1,806 (Jan. 22 high).

On a larger scheme of things, only a daily close (as per UTC) above $2,400 would revive the bull run. Such a move would confirm upside break of the falling channel pattern and could yield $2,900-$3,000.

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