Zcash Faces Potential Correction Amid Overbought Conditions

According to Cointelegraph, Zcash (ZEC) has experienced a remarkable surge, increasing by approximately 1,500% over the past two months and reaching $750, its highest level since January 2018. This rise has been fueled by endorsements from notable figures in the cryptocurrency sector, including Naval Ravikant and Arthur Hayes. Despite the impressive rally, technical indicators suggest that ZEC is extremely overbought, posing a risk of a significant price correction in the coming weeks. Zcash's weekly relative strength index (RSI) has hit a record high of 94.24, indicating that the cryptocurrency is in an overbought zone. Historically, ZEC's price has continued to rise for several weeks after entering this zone, often followed by sharp corrections ranging from 45% to over 90%. The current rally is unique due to its duration, with ZEC's RSI remaining above 70 since late September, marking the longest sustained period of overbought conditions in its history. Analysts, including Altcoin Sherpa, anticipate a sharp correction, suggesting Zcash may be a "great short" and could experience a "violent end." Traders Edward Morra and DarkSide predict ZEC's price may drop to $500 in November from its current levels above $600. Market activity for ZEC has entered an "overheating" zone, with CryptoQuant's Spot Volume Bubble Map showing the most significant red cluster on record. In previous instances, ZEC crashed by over 95% after similar signals. The weekly chart indicates that ZEC's price is nearing its 20-week exponential moving average (EMA), currently around $230, which is approximately 62% below the current price. On the 4-hour chart, ZEC remains within a steep parabolic channel, testing a key support confluence formed by the 20-EMA and the lower parabola trendline. A successful rebound from this zone could reignite bullish momentum and push prices toward the upper range of the pattern, between $900 and $1,000, aligning with Hayes' prediction. This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.