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ZCash sheds 20% in 3 days – Should swing traders still remain bullish?
Another day, another crypto market price drop, and another $900+ million in liquidations in the derivatives market. Unlike the previous weekend’s mass liquidations, ZCash [$ZEC] bulls were unable to shrug this hit off.
Since the 25th of May, the privacy altcoin has lost just over 20%. AMBCrypto had reported earlier this week that $ZEC had accomplished a bullish breakout from a local range.
Since then, the market-wide selling pressure has forced $ZEC back into the range.
Bitcoin [BTC] was also down nearly 5% since Monday, helping explain the $ZEC pullback. Despite the pace of $ZEC’s losses, there’s reason to believe that the recent ZCash drop was just that—a pullback.
The ZCash buying opportunity
The recent AMBCrypto report had taken a bullish stance on the privacy token and noted that $486 was the invalidation level for this bias. This idea still held. The recent losses have pulled $ZEC to a key Fibonacci retracement level at $530.
Source: $ZEC/USDT on TradingView
The closer ZCash retreated to the $486 swing low, the more bulls were at risk from the bears. The A/D indicator signaled that sellers have been in control over the past week.
Meanwhile, the MFI on this timeframe was at 10.35, a sign that the asset was heavily oversold.
It presented a good risk-to-reward buying opportunity but also came with a clear sign of where to exit the trade.
Given the wider market sentiment and Bitcoin’s bearish shift, it is possible that $ZEC is forced to shed more in the coming weeks, even as it retains its higher timeframe bullish structure.
Source: CoinGlass
The 1-month liquidation heatmap revealed clusters of liquidations from $520 to $470. These magnetic zones would likely be revisited soon.
However, swing traders and investors need to remain patient. The market is about to make its decision and reveal its hand. Until a breakdown below $486 comes about, traders can await a lower timeframe bullish shift to buy $ZEC.
