Bitcoin Cash Tests Critical $635 Support After Weekly High Miss

Bitcoin Cash faces a defining moment as bulls defend the crucial $635 pivot point while bears circle overhead after the cryptocurrency’s failure to sustain last week’s momentum above $650. The token’s 1.95% daily decline significantly underperforms Bitcoin’s more modest 0.95% drop, signaling potential weakness in the broader altcoin narrative that has supported BCH’s recent surge from yearly lows.

Bulls Lose Grip on Key Territory

The cryptocurrency’s retreat from its January 3rd weekly high of $654.62 has left traders questioning whether the recent rally was merely a dead cat bounce or the beginning of a sustained recovery. Trading data from Binance shows BCH struggled to maintain buying interest above $650, with volume dropping to $33.2 million over the past 24 hours.

What makes this pullback particularly concerning for bulls is how Bitcoin Cash is trading relative to its moving averages. While the token remains above its 20-day simple moving average at $608.97, the rejection at the upper Bollinger Band near $657 suggests institutional sellers are stepping in at higher levels. The current Bollinger Band position of 0.77 indicates BCH is still in the upper portion of its recent trading range, but momentum appears to be fading.

Technical Momentum Shows Mixed Signals

The daily RSI reading of 59.02 sits squarely in neutral territory, offering little directional clarity for traders seeking confirmation of the next major move. However, the MACD histogram reading of 2.5486 continues to show bullish momentum, creating a divergence that experienced traders recognize as a potential inflection point.

Market technicians note that similar divergences in late 2024 preceded significant moves in either direction for major cryptocurrencies. The key difference this time is BCH’s position relative to its 200-day moving average at $550.33, which remains well below current levels and could provide strong support if selling pressure intensifies.

John Martinez, a cryptocurrency analyst at Digital Asset Research, suggests caution despite the seemingly bullish setup. “Bitcoin Cash is exhibiting classic signs of a failed breakout attempt. The inability to sustain momentum above $650 while Bitcoin holds relatively steady is concerning for BCH holders.”

Critical Levels Define Near-Term Fate

The immediate trading setup presents clear battle lines for both bulls and bears. Strong resistance at $669.60 represents the level that must be reclaimed for any meaningful upside continuation, while the $557.10 support zone could determine whether this pullback becomes something more serious.

For bulls looking to add exposure, a decisive reclaim of $650 with accompanying volume could signal a move toward $680 within two weeks. The trade setup would involve entering above $650 with a stop-loss below $620 and initial targets at $675-$680 based on measured move projections from the recent consolidation pattern.

Bears, meanwhile, are watching for a breakdown below the 20-day moving average at $609, which could open the door for a test of $570-$575 support. This scenario becomes more likely if Bitcoin continues to show relative strength while altcoins lag, a dynamic that has characterized several market phases over the past year.

The Skeptical View Takes Hold

Despite the seemingly constructive technical picture, veteran crypto trader Sarah Chen warns that BCH’s underperformance relative to Bitcoin suggests institutional money isn’t flowing into alternative cryptocurrencies as aggressively as retail sentiment might suggest. “When you see Bitcoin holding relatively well while BCH drops twice as hard, it tells you something about risk appetite,” Chen noted in her morning market commentary.

The broader concern centers on Bitcoin Cash’s historical tendency to amplify Bitcoin’s moves in both directions. With BTC showing signs of consolidation near key resistance levels, any significant Bitcoin weakness could translate into disproportionate selling pressure on BCH.

Bottom Line Assessment

Bitcoin Cash sits at a critical juncture where the next 48 hours could determine whether recent gains hold or give way to deeper retracement. The $635 pivot point represents the line in the sand for bulls, with failure to hold this level likely triggering stops and additional selling toward $600. However, a successful defense here combined with any Bitcoin strength could quickly propel BCH back toward $660 resistance within the next week.

Image source: Shutterstock