ZCash rockets beyond $500 despite warning signs… What now?

Key Takeaways

Is it dangerous to buy ZCash at these elevated levels?

It can be extremely dangerous if bought on margin, and could be profitable if the price reaches the $591 and $726 targets-traders should manage the risks and have a clear invalidation for their buys.

Is there a catch to the current ZCash rally?

Traders and investors should remember that, narrative aside, ZEC has not fundamentally changed — yet it is up 1,218% since early August. Instead of buying more, it might be wiser to take profits.

ZCash [ZEC] smashed aside the $500 psychological resistance on Thursday, the 6th of November.

On Wednesday, a day earlier, the bulls managed to drive prices to $501, but were forced to retreat to $468. This retreat was as brief as it was shallow.

With high trading volume and six consecutive green days, and after outperforming most of the market in October, ZCash investors must be euphoric.

Technical indicators reached overbought levels never before seen in the history of ZEC’s trading.

Overbought signals didn’t matter when ZCash’s price had quadrupled within a month back in the first week of October, and it might not matter now.

How much higher can ZCash go?

Source: ZEC/USDT on TradingView

In an AMBCrypto report last week, we reported how a rally to $726 is possible. That hasn’t changed, with recent price action vindicating the expectation of a rally past $400.

The weekly chart showed just how quickly gains can come once key levels are breached.

Yes, the MFI was at 99.59, the highest weekly reading ZEC has ever seen. While this can lead to a pullback, it is not an immediate “sell” signal for traders and investors should.

Instead, taking profits level by level for traders would be a sensible route. The next levels to watch are the 61.8% and 100% Fibonacci extension levels at $591.6 and $726.9.

Source: ZEC/USDT on TradingView

On the 4-hour chart, a bearish divergence between MFI and price was seen. However, we also see the moving averages being respected as dynamic support.

Traders shouldn’t rush to go short because of a divergence, and can look for a pullback to the moving averages to assess buying opportunities.

However, traders and investors must remember one important thing. In a post on X, trader Credibull Crypto noted how nothing fundamental has changed for ZEC from the past six months.

An explosive narrative built up in September, and is propelling prices higher.

This narrative might not last forever – so book profits while you can, and enjoy the ride.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion