Renowned financial expert, the Bollinger Bands Inventor John Bollinger, has just said that Bitcoin could face a drop. Bollinger, the man who is credited with the invention of the widely used Bollinger Bands indicator, pointed out some particular properties in the Bitcoin price chart that tell about consolidation or pullback that may be very near after the price of BTC jumped from $66,000 to almost $72,000 earlier in the week. Nevertheless, he went on to say that his vision of the longer term was not pessimistic.
Bearish Argument By John Bollinger
The daily Bitcoin/USD chart is the focus. Bollinger prefers the two-bar reversal pattern found near the upper Bollinger line. Bitcoin’s price will sometimes touch the top Bollinger bands. The upward movement is ending as confirmed by those variations.
In the chart, the lower Bollinger band is the lowest line and the upper Bollinger band stands for the 20-day SMA. The upper and lower bands are two standard deviations apart. They spread out as well as get closer together following price changes. On Tuesday, the BTC price hit an extreme point of $71,977 that surpassing the upper Bollinger Band line. And then Bitcoin made a reversal pattern before pulling back.
Price movement will start with the exploration of Venus and there will be other elements involved. These include information showing that when there is no price change, the 20-day moving average which is the middle of the Bollinger Bands at $64,564 will be a support level. The historical chart represents the nearest resistance level as well which is $71,500 and supports $64,500 (the above middle Bollinger Bands Inventor and $58,300 (the top Bollinger Band). Widening Bollinger Bands could cause very high volatility near resistance levels. As of now, the Relative Strength Index (RSI) is at 63, not in the overbought zone and therefore it indicates the RSI is not overbought up to this point.
Bollinger has been open while talking about the indicator. He thinks traders should be careful. The setup may not be a sell signal. It could be just a pause. The BTCUSD may drop from the high. It could be a shift or consolidation. He was uncertain short term. He did not suggest being a bear.
Bullish Argument
Josh Olszewicz, a cryptocurrency expert, discussed the daily charts. In the news about Bitcoin’s price drop, he pointed out the Ichimoku Cloud indicator. The charts showed a bullish TK Cross, suggesting that buying pressure was building up. The Cloud indicator tells traders about market forces. It shows trends, support, and resistance levels. Technical analysts look at moving averages to find these factors. Olszewicz said when the short-term Tenkan-sen line crosses the medium-term Kijun-sen line from below, there is a strong signal of an uptrend. This happens when buying power is increasing.
Now Bitcoin’s price is above the Cloud. This means the Cloud can act as support or resistance. If it goes above, then traders will see it as both support and resistance. So, they will see whether the Cloud helps or hurts Bitcoin.
This is possibly a situation with a strong uptrend in the market price. It is highly expected the rise will carry on. As the price goes up over the cloud, it is a strong signal to move on. Nevertheless, John Bollinger Bands Inventor says in the short term traders need to be careful. But the present setup brings hope for more price increases. Bitcoin prices were reported to be around $68,000. This is when the price posted was US$69,846. Currently, the price of Bitcoin stands at US$55,421.
FAQs
What is the role of the Bollinger Bands in this analysis?
Bollinger pointed out that Bitcoin's price reached the upper Bollinger Band, signaling a possible reversal or pullback, with the 20-day moving average acting as support at $64,564.
What does the Relative Strength Index (RSI) indicate about Bitcoin's price?
The RSI of 63 indicates that Bitcoin is not in the overbought zone, suggesting that the price is not yet overextended.
What is the Ichimoku Cloud indicator suggesting for Bitcoin?
Josh Olszewicz highlighted a bullish TK Cross on the Ichimoku Cloud, signaling increasing buying pressure and a potential uptrend for Bitcoin.
What is the outlook for Bitcoin's price in the short term?
Bollinger cautioned traders to be careful in the short term, as the current setup might indicate consolidation, but the overall longer-term outlook remains optimistic.
