A Remarkable Rally Meets Resistance

Zcash (ZEC) could be facing a significant price correction after confirming a classic bearish chart pattern. The warning comes just days after the privacy-focused cryptocurrency completed a staggering 850% surge, climbing from its October 1 low of $76 to a seven-year high of $734.96 on November 8. Since hitting that peak, the token has pulled back by 30% and was trading around $512.

The recent rally was fueled by several factors, including a growing demand for privacy coins amid increasing regulatory scrutiny of more transparent blockchains. This trend also benefited other privacy-oriented projects like Monero, Railgun, and Dash. Zcash also saw strengthening network fundamentals, with data showing a 60% increase in the amount of ZEC held in shielded pools over the last month. These pools use zk-SNARK cryptography to enable fully private transactions.

Market Sentiment Begins to Shift

Despite the strong fundamentals, market sentiment now appears to be turning bearish. Data from CoinGlass reveals that open interest in ZEC futures has fallen by 28% in the last 24 hours to approximately $846 million. A decline in open interest often suggests that traders are closing their positions, indicating a lack of confidence in the current price trend.

Furthermore, the long-to-short ratio has dropped below 1, signaling that a growing number of traders are now betting on a price decline rather than further gains. This shift could introduce more bearish pressure on the token’s price in the coming days.

Zcash Technical Analysis

On the 4-hour chart, Zcash has confirmed a breakdown from a double-top pattern, a formation that often signals an impending price drop. The pattern is defined by two peaks at $749 and $683, with a neckline of support at $503.42.

Momentum indicators support the case for further downside. The MACD lines are pointing downward, and the Relative Strength Index (RSI) is also declining, with more room to fall before it reaches oversold territory. If the bearish momentum continues, Zcash could first test the psychological support level at $400, which aligns with the 50% Fibonacci retracement level.

A decisive break below that support could trigger a steeper decline toward $256.41. This target is calculated by measuring the height of the double-top pattern and subtracting it from the neckline, representing a potential 50% drop from current levels. Conversely, this bearish outlook would be invalidated if the price manages to rebound and reclaim the $600 psychological resistance area.

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