The Bitcoin dominance rate (BTCD) has created a double bottom at the long-term support area of 39.50%.
Although it has exited a descending resistance line, it has yet to break through a crucial resistance zone, which would confirm that the trend is bullish.
Long-term double bottom
BTCD has been decreasing since the beginning of the year. This led to a low of 39.66% on May 19.
After a slight bounce, the rate dropped to the 39.50% support area once more in the beginning of September. This created a double bottom pattern, which was combined with a bullish divergence of the RSI and MACD.
In addition to this, the double bottom is considered a bullish pattern. Therefore, a bullish movement could follow.
Cryptocurrency trader @DTCcryptotrades presented a BTCD chart, indicating that the current level does not support high altcoin exposure. This fits with the image outlined above, because of the long-term support area, and the presence of both a bullish pattern and bullish divergence.
BTCD breakthrough in progress
The daily chart shows that BTCD has already broken out of a descending resistance line which has been in place since July 30th.
The breakout is somewhat supported by the RSI and MACD. While both are increasing, the former is still less than 50 and the latter is negative.
There is very strong resistance at 44.5%. Resistance is created by the 0.5 Fib retracement resistance level, the Supertrend line (which is bearish) and a horizontal resistance area.
Therefore, until it breaks out from this area, the trend cannot be considered bullish.
Number of waves
The most likely wave count suggests that BTCD is in the fifth and final wave of a bearish (orange) pulse.
The most likely target for the downward movement is between 33.89-35.85%. It is found using the length of wave one (orange) and an outer retracement on wave four (black). This would lead to a new all-time low.
An even shorter perspective shows that BTCD is probably in the last sub-wave of the last wave. Therefore, it is expected to reach a bottom soon and initiate a significant upward movement afterwards.
