John Bollinger, known for his expertise in market analysis, recently shared his thoughts on the current trajectory of the bitcoin market, noting that the leading cryptocurrency is showing “signs of strength.” This observation comes as bitcoin consistently sets new highs amid the ongoing bull run.
The asset has seen an increase, surpassing $44,000, representing a 4.5% increase in the last 24 hours. It now appears to be targeting the next resistance level.
bitcoin shows signs of strength
John Bollinger, the creator of the renowned Bollinger Bands, a popular technical analysis tool, has applied his methodology to measure the movement of the bitcoin market. Bollinger Bands are normally used to measure the volatility of a financial instrument.
They consist of a middle band, a simple moving average flanked by two standard deviation lines. These bands adjust with market conditions, widening during volatile periods and contracting during calmer times.
Recent Bollinger analysis highlights that bitcoin is trading outside its daily and weekly Bollinger Bands. This is particularly noteworthy as it suggests a strong continuation of the current uptrend without any signs of divergence.
On November 21, a two-bar reversal pattern was observed in the middle Bollinger Band, further reinforcing the strength of bitcoin's price action.
The air is getting a little thin up here, but all we see for now are signs of strength. We are out of the daily and weekly BBs without divergences. The last control formation was the 2-bar reversal in the middle BB completed on November 21st. $BTCUSDhttps://t.co/B4ZU3vpTvV
-John Bollinger (@bbands) December 5, 2023
bitcoin Price Action: Interpretation of the Signs
bitcoin's bullish momentum continues unabated, with an increase of close to 5% in the last 24 hours, surpassing the $44,000 threshold. Interestingly, the cryptocurrency shows no signs of immediate slowdown or pullback.
However, larger scale technical analysis suggests that bitcoin could be approaching a major retracement zone. In the period of one week, there is a block of orders between the regions of $48,000 and $50,000.
An order block is essentially an area where significant buying or selling has occurred in the past, causing substantial price movement. When price revisits these blocks, they often act as key levels for possible reversals or trend continuation.
If bitcoin rises to this region, a pullback could be in the cards. However, invalidating this order block and continuing its rally could set the stage for a reversal, possibly when it reaches the breakout block around the $60,000 region.
A breakout block is a specific price zone where the market has previously shown a substantial reversal, breaking a resistance or support level. These blocks are often considered potential areas where the price could experience significant movements or change direction. If bitcoin takes advantage of this breaking block, it could signal another pivotal moment in its price trajectory.
Featured image from Unsplash, chart from TradingView
