Zcash (ZEC) Technical Analysis: Sapling Upgrade Activates but ZEC Faces Bearish H&S Pattern

Today Zcash announced the launch of their latest upgrade, Sapling, which dramatically improves the efficiency of “shielded transactions” that take place on the Zcash network. This new milestone development has been in the pipeline since early 2017 and its arrival was expected to draw significant attraction towards the project, but so far new investor support has been slow to appear.

Right now ZEC is down 2.33% against BTC as the crypto market slides in tune with Bitcoin shedding $150 today. Timing has been less than ideal for Zcash, as bullish sentiment departs from the market and investors appear to be recoiling into stablecoins.

Will we see a late bullish surge pick up once the crypto market recovers, or has Zcash missed its opportunity to draw in new investment? Let’s take a look.

On the 4hr ZEC/BTC chart we can see that the asset has fallen inside a bearish head and shoulders pattern (H&S) over the last ten days, with both shoulders and the head of the formation tracking along a clear downtrending neckline (black dashed line). Beneath the neckline we can also see a solid support at the 0.0181 BTC level which has assisted in preventing ZEC from unravelling further on 3 occasions. Typically these patterns are strong trend reversal signals once the asset falls closes beneath the neck line, but the low volatility we have been witnessing in the market recently has helped a number of other cryptos survive harsh declines by forcing them sideways.

Right now bullish traders have managed to drive the asset back on to the neckline support after ZEC crashed through it and on to the solid support below. This shows that good sentiment is building and that bulls recognise the current threat of what will happen if ZEC closes the day below this danger zone level.

Over 30min candles there are a number promising indicator signals that suggest bulls will hold at this vital support level in the short-term despite the current bear market pressure, but if the rest of the crypto market continues to slide over tomorrow then it’s unlikely that Zcash will endure.

-The 12MA on the MACD is still yet to converge with the 26MA but it is gaining on it fast as buying momentum increases.

-On the RSI, ZEC has managed to climb out of the oversold region and is now tracking back inside the index channel.

-The Parabolic SAR is showing signal points beneath the price action which tells us that the current trend is favourably bullish. 

We would like to see further bullish confirmations from the Ichimoku, the CMF and Moving Average indicators before expecting a new uptrend from the current support but for now this recent momentum is looking like a good start.

Zcash (ZEC) Price Targets

In the video analysis above we have already discussed the bearish price targets and optimal buy zone for this asset, should selling pressure overpower the buyers and break through the solid support.

Below are bullish price targets in case a late buying spree arrives to springboard ZEC away from the current bearish pattern. The price action has been adhering well to the Fibonacci retracement levels so we’ll use these to predict the most likely resistance points going forward.

Price Point 1: 0.382 fib level at 0.0188 BTC (3.07% ROI)

Price Point 2: 0.5 fib level at 0.0191 BTC (4.28% ROI)

Price Point 3: 0.618 fib level at 0.0193 BTC (5.49% ROI)