Categories: Market

Bitcoin Dominance (BTCD) is struggling to bounce back from the local spike after falling

Bitcoin dominance (BTCD) is likely in the early stages of a short-term reversal that could trigger a strong upward move thereafter.

BTCD has fallen since October 20th after hitting a local high of 47.72%. However, it appears to have found support at the 0.5 fib retracement level at 43.60% and is bouncing back.

Technical indicators are at a crucial moment. MACD is right on the 0 line after moving up out of the negative zone. A rejection or break above the zero line will strongly confirm the direction of the trend.

Likewise, the RSI is currently at the 50 line and is likely to fall below it. The RSI is a momentum indicator and a break below 50 is often viewed as a transition from an uptrend to a downtrend.

However, the supertrend is bullish (green line), so we can assume that the 2-day technical indicators are sloping up.

BTCD 2-day chart | Source: TradingView

Future movement

Trader @Murfski sketched the BTCD chart, stating that it appears to be nearing a low point and an upward move is expected.

The source: Twitter

As seen above, the technical indicators offer a very mixed outlook on the daily timeframe. However, the six-hour chart is more bullish.

BTCD is about to bounce off the support line of an ascending parallel channel. As long as the channel is intact, the short-term trend is still bullish.

In addition, both the RSI and the MACD create bullish divergences. This means that as the BTCD is falling, the downside momentum will weaken. This signal usually precedes a trend reversal.

BTCD 6-hour chart | Source: TradingView

The two hour chart shows strong resistance between 45.2% – 45.7%. This is both a horizontal resistance level and a fib level.

If BTCD manages to break this area of ​​resistance, it could move upward faster.

BTCD 2-hour chart | Source: TradingView

Has BTCD already bottomed out?

The weekly chart shows BTCD has bounced off the horizontal support area at 39.50. The rally preceded the bullish divergence of the RSI. However, the RSI has now created a hidden bearish divergence. While the former usually precedes an upward trend reversal, the latter usually precedes the downward trend reversal.

It remains to be seen whether the rise in BTCD will invalidate this divergence. In any case, there is still a long way to go before the trend can be called bullish as BTCD has not even hit the 0.382 Fib retracement level at 52.65%.

However, it looks like a near-term rally is expected.

BTCD weekly chart | Source: TradingView

You can see the Bitcoin price here.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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