The Bitcoin Dominance Rate (BTCD) is showing strong signs of an uptrend reversal, but has yet to break through a crucial resistance zone.
Until it is successful in doing so, it is not practical to consider the trend as bullish.
BTCD bursts
The BTCD has been declining along a descending resistance line since July 30 (red icon).
On Sept 18, it managed to break out, indicating that the downward movement had now ended.
Price action and technical indicator readings are bullish.
The MACD, which is created by a combination of short- and long-term moving averages (MA), has been moving upwards, and its histogram is positive. This means that the speed of the short term trend has exceeded that of the long term. However, the fact that it is not yet positive means that the short-term MA has not moved above the long-term MA.
Likewise, the RSI, which is a momentum indicator, has moved above 50. This is often a sign that the trend is bullish, while the opposite is true when the RSI is below 50.
The last time the RSI broke below 50 was July 31, when the decline along the descending resistance line began.
In order for the trend to be confirmed as bullish, BTCD has to move above the 44.50% area. This is the 0.5 Fib retracement resistance level and coincides with the Supertrend resistance line (red line). A movement above the line would go a long way in confirming that the trend is bullish.
Short-term movement
Cryptocurrency trader @DTCcryptotrades tweeted a BTCD chart, indicating that the 44.50% resistance zone has been reached.
The shorter-term six-hour chart also provides bullish signs. It shows that BTCD has broken out from an ascending parallel channel. This is the sign of an impulsive move, meaning that the current trend is bullish.
Also, the MACD and RSI provide a similar bullish reading like the daily time-frame, with the exception being that the MACD is positive, meaning that the bullish trend is more potent.
However, the 44.85% area is also the 0.5 Fib retracement resistance level, which increases its importance.
Therefore, whether BTCD breaks out or gets rejected from the 44.85% resistance area is crucial for determining the future trend.
