Bitcoin Dominance and when to buy/sell Altcoins
Bitcoin dominance index promises new bullish trend
– The dominance index rose above the long-term support line of 62.5%
– Resistance formed at 65.85% and 69%
– The index has moved along a long-term resistance line since February 2019
The Bitcoin Dominance Index (BTCD) reached its long-term support line at 62.5% on July 26, recovered quickly and continued to rise. However, it is not yet complete confidence that this trend is definitely bullish..
BTCD bounced off long-term support
Bitcoin Dominance Index peaked at 68.92% on May 7 and has since moved along bearish support.
On Sunday, July 26, the indicator approached the support line at 62.50%, which already passed the test of strength in mid-February. This time, the index also bounced off this area and went up, forming a large-scale bullish engulfing the next day..
The rally was preceded by strong bullish divergence in RSI and MACD, which also reinforced the significance of the reversal.
BTCD chart, source Tradingview
Cryptocurrency trader @ anbessa100 claims bitcoin dominance index will continue to rise to reach 65.8%.
– Second close of 4-hours above $ 10888 will confirm the bullish trend
– in this case, the target level will be 200MA around 65.80%
The 65.85% area is extremely important as it provided support throughout June. It can now act as resistance in case the price reaches it again. In addition, it is amplified by the presence of a 200-day moving average (MA).
However, this level is above the descending resistance line. Therefore, it is possible that the price will test this area, forming a long upper shadow, and then drop below.
However, until the price breaks the 65.85% mark, the trend is not considered bullish..
Interaction with Bitcoin
Since July 26, when BTC began to rise rapidly, BTC and BTCD have been forming a positive correlation. Thus, a prolonged period of negative correlation ended..
If the current correlation continues, the rise in BTC will cause a further increase in BTCD and vice versa.
In conclusion, we note that BTCD has corrected sharply, but the trend has not yet switched to bullish mode, for this to happen, it must overcome the 65.85% mark.
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