Traders are hoping that Bitcoin (BTC) is on track to achieve historic gains after an important trend line breakout. The breakout, which is set to happen soon, is known as a Bollinger Bands indicator for the Bitcoin monthly chart. This rare signal points to a 2017-like rally, where BTC price rose from $1,000 to almost $20,000.
Bollinger Bands are a key volatility tool used to track the movement of price timeframes. They revolve around a 20-period simple moving average (SMA) serving as a midline, with two standard deviations above and below the SMA line outlining the channel. When price comes into contact with the outer bands, or even breaks beyond them, this is often interpreted as an important signal by traders.
On the one-month BTC/USD chart, we can see that the price is currently breaking through the SMA line, hinting a potential pattern repeat of the past Bitcoin bull cycles. Popular trader Titan of Crypto shared his analysis on this situation and described it as an 'inexorable breakout', predicting that the first target of this short-term trend would be around the point of the halving in one year’s time.
John Bollinger, the bands’ creator, also commented on Bitcoin’s situation last month. He argued that Bitcoin was at a critical point on daily-timeframes. At that time, the price was retesting the SMA line as support, and now, it is slowly inching up towards the upper band.
We can see from market data that large corrections do take place after the upper parameter is met and exceeded, although not at a moment before. CryptoCon posted a tweet to emphasize this point and mentioned that Bitcoin 3 week Bollinger Bands still remains intact, despite the slight downdraft from its local highs at $32,000.
Ultimately, the technical analysis of trading indicators is only part of the picture. Crypto markets are not only driven by technical levels, but also by news and regulatory developments around the world. Knowing this, it's always important to keep an eye on the global environment in addition to technical indicators.
Adriana Parker
- 2023-05-06
Bitcoin Set for Historic Gains After Bollinger Bands Breakout
A Bollinger Bands breakout is one of the most important signals traders can use to measure bitcoin volatility. Its rare occurrence has market participants expecting a 2017-like rally, where prices skyrocketed from $1,000 to nearly $20,000.
