Zcash (ZEC) underwent a 20% correction which, according to cited technical analyses, could be the consolidation prior to a significant breakout. The move affects leveraged investors, derivatives traders and compliance teams due to its impact on liquidity and forced-liquidation risk. The technical reading suggests potential for continuation, but the overbought levels raise the probability of immediate pullbacks.
ZEC’s price has been consolidating within what analysts identify as a “bull flag” pattern, formed after a strong rally that acted as the flagpole and the subsequent sideways phase as the flag. A bull flag is a continuation technical pattern: a strong bullish impulse followed by a tight consolidation that can precede a continuation of the trend.
Additionally, technical indicators have shown a hidden bullish divergence: the price made a higher low while the RSI recorded a lower low, which suggests selling pressure is waning. A hidden bullish divergence is when the price rises in relative lows and an oscillator does not confirm the drop, indicating a possible bullish continuation.
Liquidation heatmaps show a “short-heavy” zone between $529 and $651 and, according to the analysis, short exposure on Binance would be around 60% above long exposure during that period; that imbalance creates conditions for a short squeeze if the price starts to rally.
Has Zcash’s breakout arrived?
At the same time, weekly and daily indicators show overbought levels (weekly RSI at 94.24; daily at 85), which increases the risk of immediate pullbacks. Volume on the previous breakout reached approximately $1.8 billion, and the Fibonacci extension places relevant resistances around $663.37.
Technical scenarios mention decisive levels: a break above the $612–$688 range would confirm the flag and open targets at $749, $898 and $1,010, with more ambitious projections alluding to $2,030 in the case of a full flagpole extension; conversely, losing support at $488 would invalidate the pattern and could lead to a drop toward $371. Additionally, the demand narrative includes Zcash’s privacy dimension, citing public calls that feed perceptions of value beyond pure speculation.
The analysis reading points to effects on adoption, liquidity, regulation and investment, conditioned by the technical structure, the concentration of shorts and the overbought levels.
