Bitcoin Bulls Are Back! Latest Signal Confirms Bullish Trend is Brewing
Those who were burned by Bitcoin’s last big bull run are rightly skeptical that another bull run is coming soon. However, a trend strength indicator now confirms the existence of a new emerging uptrend.
Have bulls finally taken back control of crypto? Marginalized investors and traders will want to pay attention.
How Technicals Could Confirm a New Bitcoin Uptrend
Bitcoin price is retreating after a few failed attempts to breach the $38,000 resistance. This sudden weakness after a major breakout is both reassuring for bears and confusing for bulls. Those on the margins still don’t know what to do.
But that’s what technical indicators were designed to do: cut through the noise and emotion, allowing the tools to make decisions for you.
According to a tool for measuring the strength of trends called the Average Directional Indexthe Bitcoin bullish trend just became official as the indicator surpasses the value of 20. The last time BTCUSD reached over 20 while the bulls were in charge was in August 2020, before a rally of more than 450%.
For comparison, another 450% increase would put the price per piece around $200,000. However, each individual trend behaves differently and peaks at a different ADX reading. This means anything is possible, but for now the rise above 20 on the ADX is notable.
The trend is confirmed by a reading above 20 | BTCUSD on TradingView.com
How to tell if bulls are controlling crypto with ADX
THE Average Directional Index, as mentioned, is a tool for measuring trend strength. 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 a trend is active above a reading of 20, while anything below 20 suggests a weak trend and potential sideways price action. The tool often includes two additional indicators, the DI+ and the DI-, which show which side of the market controls price action.
If the DI+ is above, the DI- bulls are in control. Bears have control if DI- is greater than DI+. The principle 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 the bulls are stronger now than they were then, and look what happened.
The table above originally appeared in CoinChartist VIP Issue 27: The Ethereum Problem. Check the latest issue for free.
