Bitcoin could have entered a new bull market last week based on a technical indicator that has been extremely effective at determining previous parabolic movements.
Determining the trend’s direction
In a recent tweet, Sawcruhteez, a financial analyst and swing trader, emphasized that the parabolic SAR presented a buy signal on BTC’s 1-week chart. This is the first time since March 2019 that this technical index turns bullish, which could signal the beginning of a new bull market.
Investopedia defines the parabolic SAR as an indicator that provides exit and entry points by determining the direction in which an asset is moving. Also known as the “stop and reversal system,” this index appears as a series of dots either above or below candlesticks.
According to Investopedia:
“A dot below the price is deemed to be a bullish signal. Conversely, a dot above the price is used to illustrate that the bears are in control and that the momentum is likely to remain downward. When the dots flip, it indicates that a potential change in price direction is underway.”
Based on historical data, the parabolic SAR has proven to be effective at determining the direction of Bitcoin’s trend.
During the week of July 31, 2017, this technical index provided a buy signal when BTC was trading around $2,600. The bullish formation was followed by a 6.6x upswing that took the pioneer cryptocurrency to peak at nearly $20,000.
Then, the stop and reversal points flipped on Dec. 18, 2017, forecasting a potential change in the trend’s direction. Bitcoin entered a bear market that saw its price decline over 80 percent. This cryptocurrency plummeted until it reached a market bottom on Dec. 15, 2018, at a low of $3,215.
The parabolic SAR was also able to
Bitcoin prepares for a bull run
Last week, Bitcoin surged 14.64 percent from a low of $7,360 to a high of $8,440. The bullish impulse allowed the parabolic SAR to flip from a bearish to bullish on BTC’s 1-week chart. As it has been seen before, this could be a strong signal that the flagship cryptocurrency could have entered a new bull run.
Willy Woo, an on-chain analyst and partner at Adaptive Capital, also believes that Bitcoin is preparing for an upward impulse. The analysts affirmed that based on on-chain analysis, BTC is bullish at the moment.
“Our fund went long a week ago. On-chain flipped 4 weeks ago. Don’t mess with the chain.”
It remains to be seen whether the buying pressure behind Bitcoin will increase. A spike in volume could allow BTC to break through the significant level of resistance around $8,500. Closing above this price hurdle will add credibility to the bullish outlook presented by the parabolic SAR. Nevertheless, an increase in supply could invalidate the buy signal as it happened before between July and August 2018.
The post Bitcoin’s bull run may have started last week based on this technical index appeared first on CryptoSlate.