The Bitcoin Dominance Rate (BTCD) is currently trading inside a crucial horizontal and diagonal resistance zone.
Whether or not the Bitcoin Dominance Rate is able to break out above this resistance will be a major factor in determining the future trend.
Bitcoin Dominance Attempts to Clear Resistance
The BTCD was rejected on Nov. 8, causing a sharp drop that took it to a low of 60.80% on Nov. 24. Since then, BTCD has been gradually moving upwards.
It’s currently trading inside the 64.12%-64.91% resistance area created by the 0.5-0.618 Fib retracement levels. Reclaiming this area would go a long way in indicating that the trend is bullish.
Technical indicators in the daily time-frame have already turned bullish, supporting the possibility of a breakout. The bullish trend would likely be confirmed by a positive cross in the Stochastic oscillator.
The significance of this resistance area is further strengthened once we take a look at the weekly time-frame. The resistance area coincides with a resistance line that has been in place since September 2019. The line has been validated four times up to this point.
A breakout above the line would likely cause a rapid upward movement. On the other hand, the closest support area is found at 62%, and a breakdown below it would likely trigger a sharp drop towards the 52%-56% range.
Technical indicators are bullish, supporting the possibility of a breakout.
Future BTCD Movement
Cryptocurrency trader @TradingTank outlined a BTCD chart which shows an ascending wedge pattern. He stated that whether BTCD breaks out or down from this pattern will be a major determinant in if altseason will begin.
The ascending wedge is considered a bearish pattern, and the movement inside it seems corrective. In addition, there is an unconfirmed bearish divergence in the RSI.
While this suggests that a breakdown from the pattern is likely, due to the bullishness in higher time-frames we cannot yet determine if that will lead to new lows or to a higher low.
Since Ethereum (ETH) is the largest altcoin ranked by market capitalization, the movement of the ETH/BTC pair is a good predictor of BTCD movements.
ETH has broken out from the ฿0.0295 area and validated it as support after. In addition, it is following an ascending support line.
As long as it is trading above this line, ETH is expected to move upwards towards the closest resistance area at ฿0.033.
The RSI has generated a bullish divergence and the MACD is moving upwards, supporting this scenario.
Due to conflicting readings from long and short-term time-frames, the trend of the Bitcoin Dominance Rate cannot be accurately determined. Whether it breaks out or gets rejected from the current resistance area will be helpful in establishing this trend.
The bullishness of the ETH/BTC trend makes it slightly more likely that the BTCD will get rejected.
Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.