Technical experts refer to the U.S. Dollar Index’s (DXY) recent pattern as the “kiss of death,” which frequently portends additional drops. After the DXY broke below a key support channel, shown by the black line on the chart, this technical structure appeared. The negative view was strengthened when the level was not regained on the ensuing “kiss” or bearish retest.
A glaring rejection at a significant Fibonacci resistance zone strengthens the bearish argument against the DXY. For chart watchers, this rejection is an important occurrence since it occurs at a high time frame resistance level, making it more than simply a regular decline. The violation of the blue uptrend line, which had been supporting the index since July, exacerbates this technical failure. The break from this pattern suggests a change in direction, implying that the dollar’s extended run of strength is coming to an end.
As we shift our attention to the Bitcoin (BTC) chart, we can feel the excitement building. Bitcoin and the dollar generally move in the opposite directions; as the DXY declines, alternative assets become more appealing and Bitcoin tends to rise in response.
The rising trend of the top cryptocurrency has also been supported by other lower time frame indications turning green. Should the DXY keep falling, we may witness a corresponding rise in Bitcoin’s value, which might lead it to previously unheard-of heights. It seems that the market is favouring riskier assets, which usually gain when the dollar is depreciating.
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This opinion has been shared by Glassnode’s CEO and senior analyst, who agree that the DXY is likely headed for more decline after the channel break and test of the Fibonacci resistance. Market players are extremely aware of the possible effects on cryptocurrency markets given this technical convergence.
