ZCash Experiences 36% Drop in Five Days – Is $395 the Next Target for ZEC?

ZCash (ZEC) has undergone significant volatility recently, experiencing a steep decline of 36.8% over five days following a remarkable rally. Traders are closely watching key price levels to determine whether the cryptocurrency will continue to decline or rally back. This article explores the current market conditions, technical indicators, and possible future price movements for ZEC.

Key Takeaways

ZCash shows a bullish structure on the 1-day chart, but bearish momentum dominates in lower timeframes.
A price retracement to $400 or lower is likely, but if ZEC surpasses the $520 mark with strong trading volume, it could indicate a shift towards bullish momentum.
After a staggering 323% increase from $177 to $750 in just three weeks, ZEC is currently priced at $473, suggesting that the retracement could still be ongoing.
High short-term volatility presents a risk for ZEC bulls. Market participants are questioning whether prices could fall to as low as $300 or if bulls can regain control to push prices higher.

ZCash retraces nearly 40% within five days - will the bulls lose even more ground?

Insights on ZCash's Potential for Further Decline

ZEC 4-hour Chart

Source: ZEC/USDT on TradingView

Traders have outlined Fibonacci retracement levels based on ZCash's rally over the past three weeks. Currently, ZEC is trading just above the 50% retracement level, sitting at $463.5. Typically, prices tend to test the 61.8% and 78.6% levels before concluding a retracement phase. If this pattern holds for ZCash in the upcoming days, a drop in price to around $395.9 and potentially to $299.6 could be anticipated. The On-Balance Volume (OBV) has declined in recent days but remains above a key support level.

The Relative Strength Index (RSI) has dipped below the neutral 50 level, recording a value of 40.9, indicating notable bearish momentum on the 4-hour timeframe.

ZEC 1-hour Chart

Source: ZEC/USDT on TradingView

On the 1-hour chart, the current structure is bearish (indicated by a dotted orange line). The range of $475-$518 represents a supply zone. A retest of this area may present a selling opportunity. Should ZCash bulls manage to surpass the $518 mark, it would indicate a sign of short-term strength. The overall 1-day timeframe structure remains bullish, so any signs of short-term growth should not be dismissed. However, should the price dip below $395, it would suggest that bears are still in control.

ZEC Liquidation Heatmap

Source: CoinGlass

Analysis of the liquidation heatmap indicates that a drop to around $400 is likely. The choice of a one-week look-back period reflects the fact that the current retracement is only five days old. The liquidity clusters near $400-$420 and $485-$490 are points that ZEC prices may target. Beyond $490, the $520-$540 zone is a critical area of interest. The importance of the $520 level is also highlighted on the 1-hour chart as a local resistance.

Overall, traders are warranted to maintain a short-term bearish stance on ZEC until the $518 resistance transforms into support. Increased trading volume would significantly enhance the likelihood of a bullish reversal; however, the potential for a deeper retracement should not be overlooked.

Disclaimer: The information provided in this article does not serve as financial, investment, trading, or other types of advice, and reflects the author's personal opinion.