The Bitcoin Dominance Rate (BTCD) is struggling to move above an important horizontal level, the reaction to which is crucial in determining the future trend.
Breakout From Resistance
The Bitcoin dominance rate has been declining alongside a descending resistance since reaching a high of 64.49% on June 27. The fall continued until the rate reached a low of 57.51%, on Sept.2 and began the current upward move.
Shortly afterwards, BTCD broke out from the descending resistance line, validated it as support and is currently making another attempt to break out above the 60.30% resistance area.
A breakout would likely trigger a significant rally that could take BTCD towards 62.80%.
Despite this, technical indicators do not provide any clarification as to where the price is heading next.
The RSI is still above 50 and rising, but the MACD is losing strength. In addition, the Stochastic Oscillator could be very close to making a bearish cross.
A rejection or breakout from the previous 60.30% resistance area is needed to accurately determine the direction of the future trend.
Head and Shoulders Pattern
Cryptocurrency trader @JJJCycles outlined a Bitcoin dominance chart, showing an inverted head and shoulders pattern (H&S), from which a breakout is likely. The neckline of the pattern coincides with the previous 60.30% resistance area.
The possibility of an inverted H&S pattern is there, even if the pattern is not exactly textbook, due to the unusual shape of the “head” and the deviation above the neckline.
Similar to the daily chart, technical indicators provide a mixed outlook, reiterating that a breakout/down is required before the direction of the trend becomes clear.
To conclude, a breakout or breakdown from the 60.30% area is required in order to accurately determine the direction of the future trend.
For BeinCrypto’s Bitcoin analysis, click here.
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.
