Those who suffered losses during the previous significant Bitcoin bull run understandably harbor doubts about the arrival of another one so soon. Nevertheless, a trend strength indicator is now confirming the emergence of a fresh bullish trend.
Are the bulls finally regaining control in the world of cryptocurrency? Observers on the sidelines, as well as traders, should closely monitor the situation.
How Technical Analysis Can Confirm a New Bullish Trend in Bitcoin
Bitcoin's price is currently retracing after a series of unsuccessful attempts to breach the $38,000 resistance level. This sudden downturn following a major breakout is a source of reassurance for bears and perplexity for bulls. Those who have remained on the sidelines are still uncertain about their next moves.
However, this is precisely what technical indicators were designed for – to filter out noise and emotions, allowing the tools to make objective decisions on your behalf.
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According to a trend strength measurement tool known as the Average Directional Index (ADX), the bullish trend in Bitcoin has now been officially confirmed as the indicator surpasses a reading of 20. The last time BTC USD exceeded 20 while the bulls were in control was in August 2020, just before a remarkable rally of over 450%.
For context, a similar 450% surge would result in a per-coin price of around $200,000. Nevertheless, individual trends exhibit unique characteristics and reach different ADX readings at their peaks. This implies that anything is possible, but for the time being, the breach of the 20 level on the ADX is noteworthy.
The confirmation of the trend is signaled by a reading exceeding 20 | BTC USD on TradingView.com
Identifying Bullish Control in Crypto Using the ADX
The Average Directional Index, as previously mentioned, serves as a trend strength measurement tool. It was developed by J. Welles Wilder, Jr., renowned as the creator of various technical analysis indicators, including the Relative Strength Index, Average True Range, and Parabolic SAR.
The ADX validates an active trend when its reading surpasses 20, while a reading below 20 indicates a weak trend and the potential for sideways price movement. The tool often includes two additional indicators: DI+ and DI-, which reveal which side of the market is dictating price action.
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If DI+ surpasses DI-, it indicates that the bulls are in control, whereas if DI- prevails over DI+, it suggests that the bears are dominant. The premise is straightforward and offers a clear visual representation of which market faction is currently prevailing.
Furthermore, not only are the bulls in control, but the DI+ is currently at 36, surpassing the highest reading observed back in August 2020, which was 32. This indicates that the bulls are even stronger now than they were in the past, and history has shown what they can achieve.
