Bitcoin dominance (BTCD) is falling near annual lows

Bitcoin dominance (BTCD) is about to hit a new annual low, but has recovered slightly in the short term.

Bitcoin’s dominance has been in decline since October 20, after hitting a high of 47.72%. During the decline it followed a descending line of resistance. This resulted in a low of 39.95% on December 9th. The lows were placed very close to the 39.50% long-term support area.

Then the dominance rate picked up again and broke the descending resistance line on December 12th. If it continues to rise, the key resistance is found at 44%. That target is both the 0.5 fib retracement resistance level and the horizontal resistance area.

Technical indicators are starting to give bullish signals. The MACD is rising and is about to break into positive territory. The MACD is made up of short term and long term moving averages (MAs) and this is a sign that the short term MA is gaining pace compared to the long term MA.

Likewise, the RSI is sloping up and is located at the 50 line. These indicators are often viewed as signs of an upward trend.

BTCD daily chart | Source: TradingView

Trader @TradingTank has stated that the On-Balance Volume (OBV), which measures the change in volume, is bottoming out on BTCD. While this does not need to be confirmed just yet, the MACD and RSI are also showing signs of possible bottoming out.

The source: Twitter

Long term movement

Despite the ongoing rally in the daily timeframe, the weekly chart still paints a bearish picture.

The weekly RSI has created a hidden bearish divergence (red line). The same pattern occurred before the sharp drop to the 40% area. In addition, the indicator is still below 50 and the MACD is in negative territory.

The downward move, which began in December 2020, looks like it has completed 4 waves of 1 bearish momentum. Hence, BTCD could drop another wave to complete the fifth and final wave.

Indicators from the weekly timeframe show that while the price may recover in the short term, the downward trend is likely to continue over the long term.

BTCD weekly chart | Source: TradingView

Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews

SN_Nour

According to Beincrypto

Follow the Youtube Channel | Subscribe to telegram channel | Follow Facebook page