Bitcoin Cash is oversold but here’s how traders can manage risk

ambcrypto.com:

Bitcoin Cash is up more than 30% from its lowest level so far this year and is almost entering overbought territory. However, BCH enthusiasts that might be worried about missing out still have a chance at catching the boat.

The latest bullish relief may have provided some relief from the bears. However, zooming out reveals that the latest upside is rather minuscule compared to the extent of BCH’s downside.

To put it into perspective, Bitcoin Cash needs at least a 10x move to recover back within its previous all-time high (ATH) range.

The alt is still trading below its January 2020 levels. This highlights the extent of its sell-off. It also demonstrates why BCH is still oversold.

It simply means that investors still have a chance at a healthy entry point for the next bullish phase.

While this might be favorable for long-term HODLers, things are less certain for short-term traders.

BCH’s $130.6 press-time price of 24 July is still far from the next resistance zone.

However, it has experienced increased friction after crossing above the 50-day moving average.

Source: TradingView

BCH showed signs of a sell-off from 20 June to 23 June and this was backed by some outflows according to the MFI.

However, it continues to show an affinity for the upside but on-chain metrics suggest that whales might be anticipating a cooldown, especially after the latest rally.

However, it is worth noting that BCH is not yet oversold. Hence, there is a chance that it might continue rallying.

Some of Bitcoin Cash’s metrics already point toward a potential downside. For example, the supply held by whales has declined significantly in the last 30 days.

Meanwhile, its MVRV ratio did the opposite by climbing. At press time, it was at its highest level. This means