ZCash drops 53% in two weeks – Is this the end of an explosive cycle?

ZCash has been an extreme outlier in price performance among the relatively large-cap assets in the crypto market. Its run began in September, as the privacy narrative gathered steam. The rally intensified in October.

Measured from September’s low at $38.69 to the November high of $750, the rally was a whopping 1,838.5%. This was an 18-fold return in under 10 weeks.

The peak in the first week of November, combined with the market-wide sentiment slump and Bitcoin’s [BTC] loss of the $100k level, might have ended Zcash’s [ZEC] bull run.

From a technical perspective, it can be argued that this was only a retracement phase.

An AMBCrypto report from November stressed the importance of profit-taking at the 100% Fibonacci extension level. Those levels were plotted based on the previous cycle’s swing points.

A 53% price drop in the past fortnight vindicated the earlier predictions. What can come next?

Long-term structure vs. short-term bearishness

Source: ZEC/USDT on TradingView

The 1-day timeframe saw an internal shift towards bearishness.

The higher low at $470 was breached nearly ten days ago. The recent downturn below the swing low at $424 highlighted the onset of the retracement phase. It also warned of a potential downtrend.

However, the Fibonacci retracement levels of the current run supported the idea that the rally was not over. The 78.6% retracement level has not been breached yet.

Source: ZEC/USDT on TradingView

The hourly chart did not show potential for a sizeable bounce. Here, too, the structure was bearish. The $400-$420 region had an imbalance and can act as a supply zone.

ZCash: Piecing together the technicals

In both the timeframes, the MFI showed bears were in control. Momentum and capital flow were in favor of the sellers. The daily chart showed the MFI shift to bearishness in recent days, with a drop below 20.

The hourly chart showed that ZCash was highly likely to experience more losses soon.

The OBV was not in a sizeable slump on the daily chart, but it was sliding lower on the hourly timeframe. This supported the retracement phase argument.

Key support and resistance levels

The $400-$420 was a strong short-term resistance. The $315-$321 support is being defended, but is likely to be lost soon. A daily session close below $315 would be a signal to sell.

A slide to the next Fibonacci retracement support at $197 can be expected.

Final Thoughts

• Traders can maintain a long-term bullish outlook, based on the Fibonacci retracement levels and the importance of the $200 level.
• Investors must be careful holding on to ZEC at a time when Bitcoin seems to be transitioning to a bear market.

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