BCHUSD (Bitcoin cash) hit a high of ~$3930 on Dec. 20, 2017 after which it sold off. A bearish trend line is used on the chart to indicate the bearish move in price of BCHUSD ever since. Price action can be seen to form a V-bottom (bullish signal) on Feb. 6, 2018 from where price went on to break the bearish trendline on the 4hr tf on Feb. 14, 2018, which is a sign of a resumption of a bullish trend, even if temporary.
In addition, BCHUSD (Bitcoin cash) also seems to be currently forming an inverted Head and Shoulders pattern or (Head and shoulders bottom). I have drawn the neckline on the chart. Price needs to close above the neckline (close above ~ $1,290.76) for the Head and shoulders bottom to confirm. The Head and shoulders bottom is ideally a bottom reversal pattern but it can also show up as a continuation pattern which I suspect it is in this case.
The range for the target area is between $1,918.18 and $2,102.72
A close above the neckline (close above ~ $1,290.76) can be used to initiate a long position with a stop loss placed just above support area 1 (i.e. ~$1,198.50). The bottom range of the Target area can be used to take profit for example. Using this ideal scenario, risk on the trade = $1,291 - $ 1,198.50 = $92.50
Reward = $1,918.18 (bottom of Target area) - $1,291 = $627.18
Risk/reward ratio = ~ 6.7:1
Failure of BCHUSD to resume its uptrend and closure below Support area 1 (between $1,130 and $1,190.52) does suggest that Support area 2 (between $999.49 and $904.91) will be tested before another bullish move can be sustained in BCHUSD, even if temporary.
In addition, BCHUSD (Bitcoin cash) also seems to be currently forming an inverted Head and Shoulders pattern or (Head and shoulders bottom). I have drawn the neckline on the chart. Price needs to close above the neckline (close above ~ $1,290.76) for the Head and shoulders bottom to confirm. The Head and shoulders bottom is ideally a bottom reversal pattern but it can also show up as a continuation pattern which I suspect it is in this case.
The range for the target area is between $1,918.18 and $2,102.72
A close above the neckline (close above ~ $1,290.76) can be used to initiate a long position with a stop loss placed just above support area 1 (i.e. ~$1,198.50). The bottom range of the Target area can be used to take profit for example. Using this ideal scenario, risk on the trade = $1,291 - $ 1,198.50 = $92.50
Reward = $1,918.18 (bottom of Target area) - $1,291 = $627.18
Risk/reward ratio = ~ 6.7:1
Failure of BCHUSD to resume its uptrend and closure below Support area 1 (between $1,130 and $1,190.52) does suggest that Support area 2 (between $999.49 and $904.91) will be tested before another bullish move can be sustained in BCHUSD, even if temporary.