Renowned financial analyst John Bollinger has recently issued a warning about the possibility of a bitcoin pullback. After the price of btc rose from below $66,000 to nearly $72,000 earlier in the week, Bollinger, the creator of the widely used Bollinger Bands indicator, pointed out specific features on the bitcoin price chart that suggest a consolidation or pullback. could be imminent, although he clarified that his outlook was not bearish in the long term.
John Bollinger's Bearish Argument
Bollinger x.com/bbands/status/1793066211494019109″ target=”_blank” rel=”nofollow”>analysis focuses on the daily btc/USD chart. His main concern centers on a “two-bar reversal” pattern seen in the upper Bollinger band. This pattern, which typically indicates a possible reversal in price direction, occurs when the price of bitcoin first exceeds the upper Bollinger Band but then closes within it during the following trading period. These moves may imply that the bullish momentum could be losing steam.
Bollinger Bands on the chart consist of three lines: the lower band, the middle band (20-day simple moving average), and the upper band. These bands expand and contract based on price volatility, with the upper and lower bands located two standard deviations from the middle band. bitcoin price peaked at around $71,977 on Tuesday, momentarily pushing above the upper Bollinger Band before closing back inside it, forming the observed reversal pattern.
Related reading
Further analysis shows the 20-day moving average, the middle Bollinger Band, which currently stands at around $64,564 and acts as a potential support level in case of a price decline. Historical chart data indicates crucial resistance near recent highs around $71,500, while support levels could be seen around the $64,500 mark, where the Middle Bollinger Band lies, and beyond at $58,300, coinciding with the lower band.
The expansion of Bollinger Bands indicates increased market volatility, particularly when the price tests resistance levels. The Relative Strength Index (RSI) is currently at 63, which is not yet in overbought territory.
In his commentary, Bollinger has clearly stated that while the setup is not fundamentally bearish, the observed technical pattern warrants caution for short-term traders. He advises monitoring either a consolidation period where the price stabilizes or a pullback where it pulls back from recent highs. “I don't like the two-bar reversal in the upper Bollinger Band for BTCUSD. Suggests a consolidation or a pullback. “It is not a bearish situation, just a short-term concern,” Bollinger commented.
The bullish argument
In contrast, renowned crypto analyst Josh Olszewicz (@CarpeNoctom), shared a bullish perspective on bitcoin through a different lens, focusing on the Ichimoku Cloud indicator on the daily chart. He x.com/CarpeNoctom/status/1793095909393539515″ target=”_blank” rel=”nofollow”>highlighted a “Bullish TK Cross with price above the cloud” on the bitcoin daily chart.
Related reading
This particular pattern is important within the realm of technical analysis, especially for those employing the Ichimoku Kinko Hyo indicator, a comprehensive tool that provides information on market momentum, trend direction, and support and resistance levels.
The “Bullish TK Cross” Olszewicz refers to occurs when the Tenkan-sen line (a short-term moving average) crosses above the Kijun-sen line (a medium-term moving average), indicating a possible trend bullish. Typically, this crossover suggests that buying momentum is increasing and may signal the beginning of a bullish phase.
The importance of this bullish signal is reinforced by the fact that the price of bitcoin is above the 'Cloud' or 'Kumo', which is considered an area of future support or resistance. When the price is above the cloud, it is generally considered a bullish signal, suggesting that the asset is in a strong uptrend and is likely to continue that way.
This setup provides a clear bullish scenario that contrasts with the short-term caution suggested by John Bollinger's analysis. At the time of publication, btc was trading at $69,846.
