Hello friends!

With Bitcoin's recent uptrend and Altcoins popping all over the place, voices of people declaring this as the beginning of a new bullrun are getting louder every day.

But seen from a purely technical standpoint, how can we know when we enter a bull market?

Are there any tools in technical analysis that help us determine if we are about to leave this bear period behind and start a major uptrend?

Of course there are! Let's take a look:

The lines that you can see on this chart are called Moving Averages (MAs)
The yellow one is the 50-MA while the white one is the 200-MA.
The numbers stand for the time units that are being used to calculate the path of the Moving Average.
On the charts that we use one candle = one time unit.
That means if we are on the daily chart, the 50-MA visualizes the average closing price of the last 50 days.

But how do these MAs help us to identify a potential bull or bear market?

This is relatively simple: If we are trading ABOVE the 200-MA, the market is generally considered to be a bull market.
If we trade BELOW the 200-MA we would consider us being in a bear market.
Easy peasy, right?

Now take a look at the chart again, is price action currently happening above or below the white MA?
That's correct, we are trading well below it which means we are officially in a bear market. That's probably no surprise for anyone at this stage.

If we trace back on the chart we can see that in this year price tried to break below the 200-MA for the first time on February 5th. But the market rose back up again and price held itself above the 200-MA until it finally broke below it again in the middle of March. Since then price is trending below the white MA and it even acted as a resistance in April and recently in July.

Important MA crossovers

But there's more to consider when analyzing Moving Averages:
If the 50-MA crosses over the 200-MA it is either called a golden cross or a death cross.
You may have heard of these terms before, so let me explain:

When the 50-MA is coming from above the 200-MA and moves below it, this is what's called a death cross.
When it's coming from below and is moving above it, that's what is called a golden cross in technical analysis.
These cross overs can be used for confirmation to assert we are really entering a bull or bear market.
That's because price can break below a MA and jump right back above it again (as in February), but MAs are moving much slower (of course depending on what time units you assign to the MA for it's calculation).
Hence they are a very important indicator that a lot of traders and analysts keep an eye on.

At the moment of writing, price would have to cover a distance of about $550 - that's a gain of 7.7% - for Bitcoin to start making contact with the 200-MA. Furthermore you can see that the 50-MA is still quite far away from crossing over the 200-MA, but at least both lines are heading in the right direction for a potential golden crossover in the coming future.

Let's sum this up: if a golden cross occured on a high time frame like the daily chart, and price also established itself nicely above the 200-MA you can assert that an asset or coin is finding itself in a bullmarket.

Let's take a look on the weekly chart aswell, to see what the two MAs are doing on a higher time frame:

As you can clearly see, the 200 is trending well below 50-MA while both lines are fanning out far apart each other, showing no signs of crossing over each other whatsoever.
So if you were a more longterm investor or swing trader that bought Bitcoin back in 2016 or early 2017, you wouldn't be worried about the price of BTC at all since the whole price development of 2018 is nothing more than a correction. Though somewhat optimistic that would still be a very legitimate take on things when analyzing the weekly timeframe. (In case you are wondering why the 200-MA starts in the middle of nowhere, that is because there is simply not enough price data on this chart that can be used to for the calculation.)

But apart from Moving Averages, are there any other signs to watch out for?

In the case of Bitcoin there is one more thing that I want to point out in this post, since it clearly shows when Bitcoin
is breaking out of this bear market. And that is this big fat white trendline:

The price of Bitcoin got rejected 4 times at this trendline during 2018! And as price data shows us we are about to touch it a fifth time. Will it withstand another bull attack? Although we cannot automatically assume the beginning of a bull run with 100% certainty upon a breakthrough, cracking this resistance will still be a very strong indication for an emerging bull market.

Exciting times are ahead of us!

-Waddle signing out-