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John Bollinger, a legendary technical analyst has called attention to what he describes as a “classic Bollinger Band W bottom” This could be the case for Bitcoin/USD. BTC, according to him, appears to have reached support at $74,000. This has set up the double-dip bottoms characteristic of a W-shaped reverse pattern. Notably, Bollinger stressed It is still necessary to confirm the set-up: “Classic Bollinger Band W bottom setup in BTCUSD. Still needs confirmation”.
Bitcoin: Has the bottom been reached?
Chart shows Bitcoin in a downward trend from the high of mid-January, near $110,000. Recent price movements have been centered around the lower Bollinger Band. The lower Bollinger Band is $77,138 and the upper one $108,837. This shows a wide variation in volatility from week to week. Bollinger’s middle line is near $93,000.
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Bollinger’s W-bottom indicator is based on two distinct troughs that have formed in rapid succession. This can be observed in the oscillator and price data below the chart. BTCUSD first fell below its previous high, around $90,000, to around $76,000. It rallied, before slipping back down to support around $74,500. The repeated dip into this horizontal support level has so far held, which Bollinger identifies as a potential base for a bullish reversal – although he cautions that a definitive move above the intervening swing high near $90,000 would help validate this classic chart pattern.
The market may also be showing signs of easing, with a slight drop in trading volume. This could indicate that bitcoin’s recent decline is due to a softer selling environment. Chart’s momentum indicator, which tracks both overboughtand underbought conditions. oversold conditionsThis thesis is supported by the fact that an area of low volume has formed near the lower border. This alignment of the oscillator with price suggests that a bottom may be possible. However, most technical analysts want to see it rise above its midpoint in order to confirm if momentum is indeed shifting to buyers.
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Bollinger bands are volatility measures. John Bollinger invented them. The envelope lines placed above and below the moving average measure it. The market usually increases in value when these bands are wider. experiences large price swingsWhen volatility is reduced, they become narrower. Bitcoin has remained wide in recent years, despite the dramatic rise of the currency from under $20,000 to over six figures.
Bollinger’s warning that W-bottoms are not always a good thing has been embraced by bullish traders. “still needs to be confirmed” The importance of a solid price movement is highlighted. Bitcoin will confirm this pattern if it can reach $90,000 with a strong volume. Until that time, the W bottom is just an option.
BTC is currently trading for $81,366.
Featured image was created with DALL.E chart by TradingView.com
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Source: www.newsbtc.com
