Those burned by bitcoin‘s last big bull run are rightly skeptical that another one will come so soon. However, a trend strength indicator now confirms the existence of a new emerging uptrend.
Are the bulls finally back in control of cryptocurrencies? Sidelined investors and traders will want to pay attention.
How Technicians Could Confirm a New Bullish Trend in bitcoin
bitcoin price is pulling back after some failed attempts to break through the $38,000 resistance. This sudden weakness after a big breakout is reassuring for bears and confusing for bulls. Those on the sidelines still aren’t sure what to do.
But that’s what technical indicators were designed to do: remove the noise and emotions, allowing the tools to make decisions for you.
According to a trend strength measurement tool called the Average Directional Index, bitcoin‘s uptrend just became official when the indicator surpasses a reading of 20. The last time BTCUSD reached above 20 while the bulls were in control was in August 2020, before. to a rebound of more than 450%.
For comparison, another 450% rally would put the price per coin around $200,000. However, each individual trend behaves differently and peaks with different ADX readings. This means that anything is possible, but for now, the rise above 20 in the ADX is notable.
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The trend is confirmed by a reading above 20 | BTCUSD on TradingView.com
How to know that the bulls are in control of cryptocurrencies with the ADX
He Average Directional Index, as mentioned, is a trend strength measurement tool. It was created by J. Welles Wilder, Jr., known as the father of several technical analysis indicators. Wilder also developed the relative strength index, average true range, and parabolic SAR.
The ADX confirms that there is an active trend above a reading of 20, while anything below 20 suggests a weak trend and possible sideways price action. The tool usually includes two additional indicators, DI+ and DI-, which show which side of the market is in control of the price action.
If DI+ is above, DI- bulls are in control. The bears are in control if DI- is above DI+. The premise is simple and provides an easy way to visually see which side of the market dominates.
Not only are the bulls in control, but the DI+ is at 36, while the highest reading in August 2020 was 32. This means that the bulls are stronger now than they were back then, and look what happened.
The graph above originally appeared on ethereum-issue?utm_source=profile&utm_medium=reader2″ target=”_blank” rel=”nofollow”>CoinChartist VIP Issue 27: The ethereum Problem. See the latest issue of ethereum-issue?utm_source=profile&utm_medium=reader2″ target=”_blank” rel=”nofollow”>free.
