With Bitcoin trading sideways for so long and volatility dropping to such uncharacteristic lows, crypto analysts are watching the Bollinger Bands closely.
Even the tools creator has since spoken out about the current price action in BTCUSD. In the past, when he speaks, a major move often follows. Is it once again time to pay attention to Bitcoin?
Bitcoin Holds Nine Consecutive Days Above Middle-BB, Bollinger Bands Continue To Contract
The first-ever cryptocurrency has spent the last over 75 days consolidating below its most important resistance level ever.
Bitcoin and other crypto-assets are historically known for their wild and explosive volatility. But that’s not at all been the case for several weeks now, leading to boredom in the crypto market.
It’s caused traders to get shaken out or move to the sidelines, or as we’ve seen, move onto altcoins. Altcoins everywhere have been surging, with a few setting new all-time high price records.
But because things have become so stagnant in Bitcoin, is has prompted crypto analysts to dig into a technical analysis tool called Bollinger Bands.
The tool consists of a moving average and two standard deviations, acting as the upper and lower “bands.” As much as 90% of price action takes place within the bands. Reversals also take place when price reaches the top or bottom, giving them a band-like effect.
The bands widen and contract depending on volatility. And because the notoriously volatile asset is so lacking in volatility lately, analysts are comparing instances where the bands have tightened this much to make sense out of what to expect next.
Data shows that the bands have contracted to historic lows – lows that often trigger an explosive move. After yesterday’s powerful rebound from low $9000s, it has even caused the creator of the Bollinger Bands to speak up about Bitcoin.
BTCUSD Price Action Gets Constructive, According to John Bollinger
According to John Bollinger, the creator of the technical analysis indicator Bollinger Bands, it is “starting to get constructive,” in BTCUSD once again.
The tool creator’s comments came after yesterday’s strong bounce at the middle line on the Bollinger Bands on BTCUSD daily price charts.
The leading cryptocurrency by market cap has now held nine consecutive daily candle closes above the middle-line. The current price action is in the process of testing it for the tenth time in a row on the daily.
Bitcoin BTCUSD Bollinger Bands Daily | Source: TradingView
Bollinger’s comments are likely in reference to this fact. An asset’s price falling through the middle line of the Bollinger Bands can act as a signal to sell or short.
Above the middle line, the opposite is true. The middle line supporting price for nine daily candles either suggests that its time for Bitcoin to test the upper band, or it could be the last stand before a major drop.
Other times Bollinger has appeared, telling the public “it’s time to pay attention,” usually an explosive move follows. And while that’s not what his comment was this time around, due to how tight the Bollinger Bands are and with so many tests of the middle line, it certainly is time to pay attention to BTCUSD.