John Bollinger, a renowned trader and technical analyst, highlighted a remarkable Bitcoin pattern on Twitter on Friday.
Bollinger, known for developing the Bollinger Bands, saw a familiar pattern developing on the chart: blastoff, rip through the upper band, consolidate, find support at the middle band, and turn upward. The Bollinger Bands are a popular tool among traders for analysing volatility and price levels.
Bollinger Bands, for those who are unfamiliar, are basically a group of three lines drawn on a price chart. The upper and lower bands are drawn two standard deviations apart from the centre band, which is commonly a simple moving average over 20 periods.
As a function of market volatility, the bands broaden when the market is erratic and narrow when the market is steady.
According to Bollinger’s tweet, the middle band is now providing support for Bitcoin, whose price is now sitting around $30,219, historically indicating that a price increase may be on the horizon.
A “blastoff,” an aggressive price surge that leads to a “rip through the upper band,” in which the price exceeds the upper Bollinger Band, signals a strong upward momentum, is the first step in the Bollinger pattern.
Usually, a period of consolidation follows, during which the price stabilises and moves back towards the middle band. When the price turns upward after finding support in the middle band, the pattern is complete, pointing to the possibility of fresh buying pressure.
According to statistics from CoinGecko, the market capitalization of bitcoin is presently about $586.9 billion, with a 24-hour trading volume of close to $14.8 billion.
