Bitcoin Dominance (BTC.D) has reached a strong resistance level and a signal for a bearish reversal has appeared. It is expected to decline in the near future.
Long-term trading range
Bitcoin Dominance (BTC.D) has been trading within a range of 39% to 48% since early May 2021. The price has repeatedly validated the support and resistance of the range.
After bouncing from the 39% level on September 9, 2022, BTC.D has formed an uptrend structure and surged to the 48% range resistance.
However, the weekly RSI indicator has moved into the overbought zone, where it has often led to corrections in previous cases (red arrows). The creation of a Pinbar candlestick last week also supports this possibility as it shows hesitation from the bull side when approaching a strong resistance level.
Therefore, BTC.D is likely to be rejected from this level once again. If so, it could correct back to the support range of 42.3%-43.4%, formed by the Fibonacci retracement support zone of 0.5-0.618 and the horizontal support zone.
BTC.D weekly chart. Source: TradingView
Double-top pattern
BTC.D has been trading within an expanding wedge since November 2022. After bouncing from the support line of the wedge on March 10 (green arrow), the price retested the resistance line of the wedge once again.
However, it was rejected from the resistance line and created a double-top pattern. This is a bearish pattern that often leads to a reversal to the downside in most cases.
In addition, the wedge’s resistance line also coincides with the long-term resistance zone at 48%, further strengthening its power.
The RSI indicator has also created a bearish divergence within the overbought zone and has dropped below the 70 level.
Therefore, BTC.D is likely to continue trading within the expanding wedge for some time. If so, it could retest the support line of the wedge near 43.5%.
Conclusion
Overall, the most likely prospect shows that BTC.D will be rejected from the 48% level and begin to correct. The potential target for this correction is the range of 42.3%-43.4%.
As BTC.D represents the dominance ratio of Bitcoin in the cryptocurrency market, this could help altcoins recover in the near future.
This perspective will be invalidated when BTC.D breaks above the resistance level at 48%.
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This article was republished from azcoinnews.com
