ZCash dips 36% in five days – Is $395 the next stop for ZEC?

Key Takeaways

Is ZCash bullish or bearish right now?

It has a bullish 1-day structure, but lower timeframes showed bearish momentum was dominant.

What can traders expect in the coming days?

ZEC will likely retrace toward $400 or lower soon, but if it rallies above $520 on above-average trading volume, it could be an early sign of bullish strength.

After making a 323% move from $177 to $750 in 3 weeks, ZCash [ZEC] has shed 36.8% within 5 days. It was trading at $473 at the time of writing, and its retracement might not have ended yet.

The short-term volatility was high, and there was the threat of further downside for ZEC bulls. Will we see this retracement take prices as deep as the $300 mark? Or can the bulls reassert themselves and drive the next move higher?

Clues that ZCash bears could force another price dip

Source: ZEC/USDT on TradingView

Traders drew a set of Fibonacci retracement levels based on the past three weeks’ rally. ZEC was trading just above the 50% retracement level at $463.5. 

Typically, prices test the 61.8% and 78.6% levels before the retracement phase concludes.

If this happens for ZCash in the coming days, a price drop to $395.9 and possibly $299.6 can be expected. The OBV has fallen lower in recent days, but has remained above a local support.

The RSI has sunk below neutral 50, and its press time reading of 40.9 signaled firm bearish momentum on the 4-hour timeframe.

Source: ZEC/USDT on TradingView

The 1-hour chart showed that the structure on this timeframe (dotted orange) was bearish. Moreover, the $475-$518 (red box) was a supply zone. Hence, a retest of this area would be a selling opportunity.

If ZCash bulls clear the $518 mark, it would be a sign of short-term strength. The 1-day timeframe structure remained bullish, so any short-term signs of bullishness should be respected. Meanwhile, a price dip below $395 would show that bears remain in control.

Source: CoinGlass

The liquidation heatmap showed that a dip to $400 is possible. The 1-week look-back period was chosen since the retracement was only five days old. The $400-$420 and the $485-$490 zones were the nearby liquidity clusters that ZEC prices would gravitate to.

Beyond $490, the $520-$540 area was a key magnetic zone. The 1-hour chart showed the importance of the $520 area as a local resistance.

Overall, traders are justified in maintaining a short-term bearish bias for ZEC until the $518 resistance is flipped to support. High trading volume would increase the chances of a bullish reversal. Until then, do not discount the possibility of a deeper retracement.

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