Bitcoin (BTCD) dominance is so close to key resistance that a break above it would indicate the long-term downtrend is over.
Since then, however, the price has bounced back in the zone, hitting a high of 42.83% on February 1st.
After that, BTCD was rejected by the 0.382 Fib retracement resistance, which sits at 42.5%. If the price manages to move above this level, it can rally to the next strong resistance at 44.5%. This is the 0.618 Fib retracement resistance and coincides with the descending resistance line.
Source: TradingView
Trader @eliz883 tweeted a chart of BTCD and stated that a rally to 48% is likely.
The source: Twitter
With overhead resistance strong, a closer look at technical indicators is needed to see if BTCD can get there.
On the daily timeframe, both the MACD and the RSI are showing signs of weakness.
The MACD, formed by the short-term and long-term moving averages (MAs), is falling. This means that the short-term MA is slowing down compared to the long-term MA and is a sign of weakness.
Similarly, the RSI, which is a momentum indicator, is also falling. While staying above 50 indicates the trend is bullish, a drop is also seen as a sign of weakness.
BTCD daily chart | Source: TradingView
An interesting development is that the rise since January 4 resembles a bullish impulse move.
If true, BTCD is in the fourth wave of this rally.
The most likely target for the top of the uptrend would be near 43.4%. The target is found using the external Fib retracement level of 1.61 on sub-wave 4 (black) and length 0.618 of waves 1-3 (white). The target is also near the previously outlined 44.5% resistance area.
BTCD 6 hour chart | Source: TradingView
As the surge took the form of a bullish impulse, it is possible that BTCD may have hit a long-term bottom.
This is supported by signals from the weekly time frame.
Both the RSI and MACD are generating very significant bullish divergences, which is rare on the weekly time frame.
Therefore, the BTCD downtrend that has been ongoing since early 2021 may be over.
Source: TradingView
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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