Legendary trader and technical analyst John Bollinger claims Bitcoin demonstrates classic Bollinger Band behavior
Legendary trader and technical analyst, John Bollinger, caught on Twitter Friday to highlight a remarkable Bitcoin pattern.
Known for his creation of Bollinger Bands, a popular tool among traders to analyze volatility and price levels, Bollinger has identified a classic sequence that plays out on the chart: break off, tear off upper band, consolidate, find support in the middle band and turn higher.
For those less familiar with Bollinger Bands, they are basically a set of three lines drawn on a price chart. The middle band is a simple moving average, usually over 20 periods, and the upper and lower bands are plotted two standard deviations from the middle band.
The bands expand and contract with volatility: when the market is volatile, the bands widen, and when the market is stable, the bands contract.
Bollinger’s tweet suggests that Bitcoin, currently priced at $30,219, is now finding support in the middle band, historically an indicator that a price increase may be ahead.
The Bollinger pattern begins with a “lift off”, an aggressive surge in price that results in an “upper band tear”, where the price breaks above the upper Bollinger Band, indicating strong upward momentum.
This is usually followed by a period of consolidation where the price stabilizes and corrects towards the middle band. The pattern ends when price finds support in the middle band and then rises again, suggesting a potential new wave of buying pressure.
Bitcoin’s market capitalization currently stands at around $586.9 billion, with a 24-hour trading volume of nearly $14.8 billion, according to data from CoinGecko.