Further cementing the bearish case for the DXY is a clear rejection at a major Fibonacci resistance zone. This rejection is not just a typical pullback but one that takes place at a high time frame resistance level, making it a significant event for chart watchers. Compounding this technical breakdown is the breach of the blue uptrend line, which had supported the index since July. The violation of this trend indicates a shift in momentum, suggesting that a prolonged period of strength for the dollar is losing steam.
Source: TradingViewTurning our gaze to the Bitcoin (BTC) chart, there is a palpable sense of anticipation. Typically, Bitcoin has an inverse relationship with the dollar; when the DXY weakens, Bitcoin often rallies as the decrease in dollar strength makes alternative assets more attractive.
The leading cryptocurrency’s upward trajectory has also been backed by several lower time frame indicators flipping green. If the DXY continues its descent, we could see a concurrent increase in Bitcoin’s ascendancy, potentially taking it toward uncharted highs. The market sentiment appears to be in favor of risk-on assets, which typically benefit in a weakening dollar environment.
Glassnode’s CEO and lead analyst has echoed this sentiment, concurring that the DXY appears poised for further downside following the channel break and encounter with the Fibonacci resistance. With such technical confluence, market participants are on high alert for the potential implications on cryptocurrency markets.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
