ZCash [ZEC] has experienced a 6.68% drawdown over the past week, but there was short-term bullish potential for the privacy token. A Bitcoin [BTC] price move beyond the $70k local supply zone would also help the market-wide short-term confidence.
AMBCrypto reported that ZEC faced a sizeable capital flight in the perpetuals market, amounting to $52 million. Large liquidations over the past month outlined the frequent price volatility.
The growth in shielded supply and transactions was a long-term positive development that entrenched the privacy narrative. In the short-term, the reaction from the $187 long-term support was an encouraging sight for the bulls.
On the daily chart, the RSI was at a slightly bearish 43 reading. The OBV has not made considerable new highs in February and was slumping back toward the local lows. Together, they showed why traders need to remain bearish.
Yet, these indicators are inherently lagging. The price action revealed a different story.
The imbalance (white box at $250) and the local former resistance at $251 (orange) have been tested and defended over the past two days. The reaction at $187, the long-term support, was followed by a brief upward move to $320 that has since withdrawn.
Yet, there is potential for the current move to extend beyond $320.
Zooming in on the H4 structure, we can see that it has flipped bullishly after reclaiming $251 as support. This level had been a local supply zone two weeks ago.
While the prevalent swing structure was indeed bearish on this timeframe, the current price action leaves room for a deeper upward retracement before the primary bearish move can continue.
The 61.8% and 78.6% Fibonacci retracement levels represent a golden zone for traders to enter the market. Even though the trading volume is low, traders can watch out for a ZCash rally to $320 and $357.
Traders can look for a low-risk long from $260 to these resistance levels. Alternatively, they can wait for a rejection from $357 to go short.
