Zcash faces breakdown risk as trendline test meets geopolitical pressures

Macro and Geopolitical Overview

The specific catalysts that propelled Zcash upward have been depleted, and the cryptocurrency now depends on macroeconomic and geopolitical trends. The Middle East situation is the primary focus.

Negotiations between the US and Iran continue regarding Tehran's offer to reopen the Strait of Hormuz. Reports indicate that the dispute now revolves around the order of actions rather than the proposal's content.

A spokesman for the Iranian government stated yesterday that Foreign Minister Araghchi had submitted a "US proposal" to the cabinet, but no additional information was given. Hence, traders will keep a close watch on news for any indications of advancement.

Federal Reserve official Williams recently bolstered the crypto market by stating he saw no rush to act following the September increase and that another single hike would probably suffice if the economy performs as projected. His remarks led to a more dovish reassessment, diminishing the probability of an October rate hike from 70% to 45%.

The weaker-than-anticipated US Core PCE figures further reduced expectations for an October hike. But it should be noted that a significant portion of the downside surprise resulted from the BEA's yearly methodological update and revisions. The agency altered how certain prices are calculated, and economists had previously cautioned that these adjustments could substantially reduce reported core PCE. Consequently, the report did not alter the inflation outlook fundamentally.

Going forward, US-Iran developments are expected to stay the primary focus. An agreement in talks would benefit Zcash by prompting additional unwinding of aggressive Fed rate hike bets. On the other hand, an extended deadlock or worsening conditions could keep pressure on risk appetite and suppress the broader cryptocurrency market.

Daily Timeframe Technical View

Zcash is once again testing the key upward trendline. Buyers are anticipated to intervene near the trendline, with a clear risk below it, aiming for a climb to the 2,000 level. Conversely, sellers seek a downward breakout to enter positions targeting a decline to 1,031 next.

4 Hour Timeframe Technical View

A narrow range appears to have formed between support at 1,360 and resistance at 1,490. Participants are likely to trade the range by buying near support and selling near resistance until a breakout occurs in either direction.

1 Hour Timeframe Technical View

A downward trendline is defining the recent retracement into the major upward trendline. Should a bounce occur, sellers are expected to use the downward trendline as resistance, with a clear risk above it, aiming to push below the main upward trendline. Meanwhile, buyers will look for a move above the downward trendline to add to bullish positions targeting new highs above resistance.

Upcoming Catalysts

Today brings the US ISM Manufacturing PMI and the latest Jobless Claims figures. The week ends tomorrow with the US non-farm payrolls report. However, the primary focus continues to be on US-Iran developments.