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Bitcoin (BTC) may experience new upward volatility as its price strength approaches significant levels, according to a traditional metric.
In a post on X dated September 18, John Bollinger, the developer of the Bollinger Bands volatility indicator, indicated that Bitcoin is set for a breakout decision.
Bitcoin Bollinger Bands indicate beginning of "walk up"
Following the establishment of new highs for September the previous day, Bitcoin is testing resistance levels that have been unattainable since mid-August, as per data from Cointelegraph Markets Pro and TradingView.
Bollinger views the indicators from the leading cryptocurrency as promising. Bollinger Bands utilize standard deviation around a simple moving average to assess both potential price ranges and volatility.
At present, BTC/USD is producing daily candles that reach the upper band. This occurrence can indicate an imminent reversal back to the center band, or alternatively, a surge of upward volatility.
The recent narrow Bollinger Bands observed on Bitcoin support the expectation that the latter scenario may unfold.
“And there is the first tag of the upper Bollinger Band after a new set of controlling bars was established at the lower band,” Bollinger remarked alongside a chart.
“The question is now can we do a walk up the upper band? Too early to answer.”
BTC/USD 1-day chart with Bollinger Bands. Source: TradingView
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Cointelegraph previously reported on the narrowing of the bands in July — an occurrence that ultimately preceded a decline to lower levels.
BTC price reset "quite reasonable"
Bollinger describes the current sentiment among experienced Bitcoin traders and analysts on shorter timeframes.
Related: FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week
Despite the observed strength this week, caution prevails as various trendlines, which previously served as support, remain above the current spot price.
Commenting on the situation, on-chain monitoring tool Material Indicators advised X subscribers to scrutinize the bulls’ momentum.
“We have heavy technical resistance overhead at the Key Moving Averages and support at the LL,” part of the commentary noted.
“It's quite possible that we round trip the range, and with any luck, we will see legitimate tests of the R/S levels that will provide us with some clarity on where BTC goes from here before the end of the week.”
Material Indicators highlighted the impending decision by the United States Federal Reserve regarding interest rates, which could lead to sudden volatility and unreliable short-term trading signals.
UPDATE 2: As mentioned earlier, it appears #BTC bulls are gaining some momentum, but things are not always as they seem. Let me explain…
Sometime after last night’s candle close/open we’ve seen a new Trend Precognition ⬆️signal develop on the Daily chart and NOW we have a new… pic.twitter.com/V0UI7JznKf— Material Indicators (@MI_Algos) September 18, 2023
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making a decision.
