When bitcoin price is in an upward or downward trend, it is usually obvious and undeniable as things can move. For example, the cryptocurrency rose from $ 3,800 to $ 65,000 during the last pulse.

Although there has been a major setback, a trend-identifying indicator created by the “father of trend following” suggests that Bitcoin is as bullish as ever, and after defending a major line of conflict, the cryptocurrency is poised to explode higher.

The Bitcoin uptrend that is not over yet

After Black Thursday in 2020, Bitcoin price entered a year-long uptrend that peaked last April around the same time that Coinbase Global (COIN) was listed on the Nasdaq.

The first cryptocurrency rose more than 1,500% and reached a market capitalization of more than $ 1 trillion. The correction erased more than 60% of that, staggering the market enough to wonder if the cycle was over.

Related reading | Which bear market? Bulls are now in control of every bitcoin timeframe

There are mixed signals everywhere, with many pointing to a bear market while others saying the bull market’s integrity has never been entirely broken. Sideways price movements after the sell-off made the current trend much less clear.

However, when you zoom out the Donchian Channels technical indicator on monthly timeframes, the sustaining of the uptrend becomes much more visible – especially when comparing the peaks of the past market cycle.

After the bulls defend the median, they should push up, causing the upper band to rise | Source: BTCUSD on TradingView.com

All about the Donchian canals and how to use them

The Donchian Channels indicator was developed by Richard Donchian in the middle of the 20th century. He was later nicknamed “The father of trend following”.

The tool itself is used to identify trends. An asset begins to trend after it crosses the median, which acts as the line of conflict between bears and bulls. An expansion of bullish or bearish energy then causes the channel bands to expand.

Related reading | Proof of Work: Bitcoin Back Programs That Make Your Money Work For You

The median is best defined as the “mean” that assets return to after a period of trending. Successfully defending the median usually leads to another wave in the primary trend. If this trend goes up, as Bitcoin price is currently showing, the upper channel should theoretically expand as prices rise higher.

Previous bear markets in Bitcoin started when the median was losing, causing the asset to tend towards the lower channel band instead. And past bull markets each had several breaks in the upper channel before another push up. Could the latest pullback be just the first of many more to come as Bitcoin climbs to the final climax of the current market cycle?

Donchian Channel for the Month says #Bitcoin is still heavily bullish after defending the median. Donchia – say you weren’t warned. pic.twitter.com/LMPwBGR5RP

– Tony “The Bull” Spilotro (@tonyspilotroBTC) August 18, 2021

Follow @TonySpilotroBTC on Twitter or via the TonyTradesBTC Telegram. The content is educational and should not be viewed as investment advice.

Featured image from iStockPhoto, charts from TradingView.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here