Bitcoin price has now retreated to $ 13,000 from 2021. Yesterday’s massive bearish red candle is an obvious sign that the trend is turning. However, a technical analysis tool used to measure the strength of trends also confirms that bears have taken over from bulls and that this could lead to a short-term downtrend.
Bitcoin bears regaining the upper hand, calling for crypto back for the first time since October
Bitcoin is undoubtedly on an uptrend and after comparing it to previous market cycles, things are just warming up.
However, this does not mean that the higher timeframe trend cannot rise while the intraday trend of the shorter timeframe is down – or that price movements over days and weeks cannot temporarily turn bearish.
Related reading | Career trader subtle hints of Bitcoin parabola collapse with fractal chart
This is exactly what has happened lately. The top cryptocurrency has saved up to $ 13,000 from its price from high to low. Yesterday’s close left a very bearish candle, a reminder that asset prices are not just rising in a straight line.
The most recent parabola may be broken, which could indicate a sharper correction is imminent. Some of the best traders and analysts expect more downward moves before things work out again.
The Average Directional Index and the DMI Show Bears have taken over the daily time frame Source: BTCUSD on TradingView.com
The Average Directional Index confirms the downward price movement. The red DMI moving so much above the green is a clear sign that bears are now back in control of the daily trend of the cryptocurrency.
The ADX itself is still well below 20, so the trend has not yet fully caught on. Notably, this is the first time since October that bears have recaptured Bitcoin when FOMO spiraled out of control.
The tool for measuring trend strength shows that bulls haven’t counted yet
The ADX is used to measure the strength of the underlying trend. As with most tools, higher time frames provide the most dominant signals.
Bears won on the daily but weekly timeframe. However, the same tool shows that bears have no real chance and that any downward momentum will be short-lived before the bulls regain control.
The Average Directional Index and the DMI Show Bears have taken over the daily time frame Source: BTCUSD on TradingView.com
Corrections in assets are often healthy, confirm resistance as support, and rekindle buying interest by reaching more attractive price levels.
Related reading | The striking similarities between the 2017 Bitcoin Peak and now
Could the pullback be exactly what Bitcoin needs to fuel up and shoot higher? Or are there just too much in common with the 2017 high to ignore the potential for a longer downtrend in the coming weeks?
Featured image from deposit photos, charts from TradingView.com
