Bitcoin price action on the monthly time frame has made a historic move to touch the lower Bollinger Bands – a popular technical indicator and volatility measuring tool.
While he cautions that there is as yet no indication that there is a bottom, the instrument’s creator says that where price action has been tapped is a “logical” level for such a bottom to occur.
Unprecedented bitcoin price action taps monthly Bollinger Bands for the first time in history
Expected bitcoin price in 2022 was closer to $100,000 per coin and above. Yet the top cryptocurrency is trading today near its pre-2017 highs of $20,000.
But unprecedented macro conditions have caused unprecedented price action in bitcoin and other cryptocurrencies. Never in the past has the top cryptocurrency by market cap been relegated to its former all-time high.
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And the price of bitcoin never reached the lower Bollinger Bands on the monthly time frame. But this is what happened last month when the crypto market was infected and the asset prices fell significantly.
BTCUSD monthly touches down on the lower Bollinger Band | Source: BTCUSD on TradingView.com
Touching the lower Bollinger Bands, however, may be a logical place for a bottom according to the manufacturer of the tool.
Time to Pay Attention: John Bollinger Explains the Logical Level for a Potential Bottom
Bollinger Bands are a technical analysis tool that can help measure and predict volatility, or find areas of potential resistance and support. It was created in the 1980s by John Bollinger, a frequent bitcoin speculator today. It relies on a 20-period simple moving average and a moving upper and lower bands each set at two standard deviations.
Mr. Bollinger points to the touch of the lower Bollinger Bands in a new tweet, where he suggests that the area will be of a “logical” level from below. However, Bollinger warned that there are still no signs of such a bottom line.
In the past, Bollinger was able to call the April 2021 peak by spotting a “three pushes to a high” bearish reversal pattern with striking accuracy. The analyst says his equipment later confirmed what he says was an “M-Type” double top.
Picture of Perfect Double (M-Type) in BTCUSD on Monthly chart is completed with confirmation by Bandwidth and %B leads to tag of lower Bollinger Bands. No sign of one yet, but it would be a logical place to put it down. https://t.co/KsDyQsCO1F
— John Bollinger (@bbands) June 27, 2022
Bollinger also shared a look at the helpful indicator in his chart, B%, which has also set historical lows. The width of the monthly Bollinger Bands can be used to gauge volatility, and there is still room for a fall compared to previous cycles.
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Is there room for further downside in bitcoin price? Or will this “logical” area have a lower form as noted by the manufacturer of the instrument? Somehow, it appears to be “time to pay attention”.
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Featured image from iStockPhoto, Charts from TradingView.com