The Bollinger band is one of the leading indicators when it comes to cryptocurrency trading. A lot of traders use the patterns formed by this indicator to predict market behaviours in order to make the most of the changes in price. Therefore, when the creator of this powerful indicator makes a pronouncement about the markets, he deserves to be taken seriously.
According to John Bollinger, the recent pullback of Bitcoin price has introduced it into a region of significant support. On his twitter handle, Bollinger described the region as an area of ‘logical support’ for the world’s leading cryptocurrency.
This is a 'logical place' for $btcusd to find support, a pullback to a breakout level and the middle BB.
— John Bollinger (@bbands) January 23, 2020
Bollinger Band Measures Volatility
Although this prediction suggests a possible bounce that will see Bitcoin experience a significant upside movement, it is expedient to fully understand how to interpret the bollinger bands. It is also important to find a correlation with other supporting indicators in order to be sure of which direction the market will go.
The Bollinger bands understudies market volatility and forms patterns of pictorial representation. The current situation and pattern formed by the Bollinger bands reveal the diminishing volatility level in the market. It looks as if the cryptocurrency market is taking a breather before embarking on another significant move.
Another crypto analyst on Twitter noted that Bitcoin is experiencing its least moment of volatility in almost a year. By implication, he believes that this is a sign of an impending big move.
All is Set For Another Price Explosion
Analysing the cryptocurrency market involves the investigation of various elements at the same time. It is the combination of chart formations, price action, trade volumes and various other indicators that make up the systems that are used by traders. Even after employing these tools, real time events surrounding the market also play a role in determining which direction price may take.
At the moment, it is relatively quiet out there and the traditional volatility of the cryptocurrency market seems to have faded. According to experts, this is just a preparation for an imminent explosive move. The direction of this movement is what is yet to be uniformly agreed.
A compression around the Bollinger band sets up the charts for an eventual breakout. If you are a trader of Bitcoin, this is the time to pay close attention to the charts and other indicators that you may have in your toolbox.
According to Bollinger, Bitcoin currently rests on a ‘logical support’. A confirmed bounce off this level could see the cryptocurrency aim for new highs in 2020. Otherwise, there could be another significant dip to lower levels as the market prepares for the third halving event which comes up later in May.
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.