Buckle up! Bitcoin Bollinger Bands signal an impending roller coaster ride
After weeks of going nowhere, Bitcoin price is preparing for a massive move. Buckle up, because we’re going to show you why, according to Bollinger Bands, BTC is about to blow.
The crypto market calms down after a comeback for the first quarter of 2023
Bitcoin has managed to survive a brutal crypto winter and even show resilience through gloomy macro conditions and rising interest rates from the US Federal Reserve. Bitcoin’s price fell sharply throughout 2022, but since the start of 2023 it has made a sharp recovery.
Despite the recent positive outlook for the Bitcoin price, it has been stuck in a tight range for several weeks now. The top cryptocurrency by market cap has been trading between $27,000 and $29,000 without being able to break out of this range. Many traders and investors are eagerly waiting for more confirmations of new trend to emerge, but the market seems to need a catalyst before a significant breakdown or breakdown.
The lack of volatility and sideways movement has seen the Bollinger Bands on the daily time frame become the tightest they have been since January 2023. The bands were even narrower then, resulting in a 40% increase. Bollinger Bands tightening signals volatility is coming for Bitcoin, and traders and investors should be prepared for a rollercoaster ride.
The bands are tight and ready to explode | BTCUSD on TradingView.com
Bollinger Bands suggest strong volatility in Bitcoin is ahead
Bollinger Bands is a technical analysis tool that was created by John Bollinger in the early 1980s. The tool is used to measure the volatility of an asset using moving averages and standard deviations. The bands consist of three lines: a middle line representing the 20-period simple moving average, and two outer lines that are two standard deviations away from the SMA.
When Bollinger Bands are tight, it means that the asset’s price is trading in a narrow range, and volatility is likely to follow. On the other hand, when the bands are wide, it indicates that the asset’s price is experiencing significant volatility. A squeeze occurs when a period of contraction gives way to sudden, violent expansion.
Given the current tightness of the Bollinger Bands for Bitcoin, the press setup suggests that a significant price move is imminent. However, the direction of this move is uncertain. Regardless, traders and investors should be prepared for volatility in the coming days or weeks.
With a big move coming, what can we expect if the direction is ultimately bearish or bullish? A bullish breakout should take BTCUSD well above $30,000 per coin, possibly extending to $40,000 in several weeks if the trend persists. A bearish breakout, meanwhile, would see Bitcoin retest $20,000 or possibly lower.
Are you ready for the volatility? pic.twitter.com/YDnVZ272rQ
— Tony “The Bull” (@tonythebullBTC) 6 April 2023
follow @TonyTheBullBTC & @coinchartist_io on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Note: Content is educational and should not be considered investment advice. Featured image from iStockPhoto, charts from TradingView.com
