The number sixth ranked cryptocurrency by market cap, XRP, is showing signs of a strengthening bullish trend according to a technical indicator designed to measure the underlying power behind price movements.
Historically, when a particular signal appears on the monthly timeframe, a breakout occurs and sends the coin soaring higher.
XRP Trend Strength Rises Above Key Level As Bulls Get Bold
XRP is still stuck at the center of a legal battle with the SEC, but technicals are potentially pointing toward a positive outcome in the case. That is according the Average Directional Index, which shows a strengthening bullish trend on weekly timeframe.
The ADX was created by J. Welles Wilder, Jr. who also developed the Relative Strength Index, Parabolic SAR, and Average True Range. It was designed to gauge trend strength.
A reading above 20 indicates a growing trend, while a reading below the level suggests a lack of a clear trend. When readings reach 50 or higher, a trend is strong but possibly becoming overextended. XRP weekly charts are currently at 25 and marching higher.
The trend is getting stronger by the week | XRPUSD on TradingView.com
Getting Directions From The Crypto Market On What’s Ahead
The ADX uses two other indicators in its calculation: the positive directional indicator and negative directional indicator. If the +DI is above the -DI then the market is bullish and vice versa.
In the image above, the +DI is above the -DI highlighting that bulls are in control on the weekly timeframe. The same is true on monthly timeframes, yet the largest moves in XRP arrive when the +DI rises above the ADX itself.
The ADX takes both the -DI and +DI and combines them, then smoothes the results. As such, the stronger the +DI becomes, the more it influences the ADX to increase. Could a growing weekly trend and ADX help give the monthly +DI that it needs?
If the monthly DI+ can spike above the ADX, #XRP will have one hell of a run pic.twitter.com/rzb4iTpvDK
— Tony “The Bull” (@tonythebullBTC) June 14, 2023