ZCash has stood out in terms of price performance compared to other large-cap assets in the cryptocurrency market. Its impressive rally started in September when the privacy narrative gained traction and continued to intensify throughout October.
Starting from a low of $38.69 in September and reaching a high of $750 in November, ZCash saw a remarkable surge of 1,838.5%. This equated to an 18-fold increase in value in less than 10 weeks.
The peak in early November, coupled with a general downturn in market sentiment and Bitcoin’s failure to sustain the $100k level, may have marked the end of ZCash’s bullish run.
From a technical standpoint, some argue that this was just a retracement phase rather than the end of the rally.
A report from AMBCrypto in November emphasized the importance of taking profits at the 100% Fibonacci extension level, which was based on previous cycle’s swing points.
A subsequent 53% drop in price over the past two weeks validated these earlier predictions. What lies ahead for ZCash?
Long-term Outlook vs. Short-term Bearishness
Source: ZEC/USDT on TradingView
On the daily timeframe, there has been a shift towards bearish sentiment.
The breach of the higher low at $470 about ten days ago and the subsequent downturn below the swing low at $424 indicated the beginning of a retracement phase and a potential downtrend.
However, the Fibonacci retracement levels from the recent rally suggest that the upward momentum may not be completely exhausted yet, as the 78.6% retracement level remains intact.
Source: ZEC/USDT on TradingView
The hourly chart also indicates a bearish structure without much potential for a significant bounce. The $400-$420 range is seen as a supply zone due to an imbalance in the market.
ZCash: Analyzing the Technicals
Both the daily and hourly charts show that bears are currently in control, with momentum and capital flow favoring sellers. The Money Flow Index (MFI) on the daily chart has shifted to bearish territory, while the hourly chart suggests further losses ahead.
The On-Balance Volume (OBV) is declining, particularly on the hourly timeframe, supporting the argument for a retracement phase.
Key Support and Resistance Levels
The $400-$420 range acts as a strong short-term resistance, while the $315-$321 support level is under pressure and may break soon. A daily close below $315 could signal a sell-off, potentially leading to a slide towards the next Fibonacci retracement support at $197.
Final Thoughts
- Traders may maintain a bullish outlook based on Fibonacci retracement levels and the significance of the $200 level.
- Investors should exercise caution holding ZEC amidst Bitcoin’s potential transition to a bear market.
Disclaimer: The information provided is the author’s opinion and does not constitute financial, investment, trading, or any other form of advice.