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According to legendary technical analyst John Bollinger, Bitcoin has formed the "double bottom" chart pattern (W-shape), which is typically considered to be a bullish sign.
Despite the bullish pattern, Bollinger has opined that the potential upside may not justify the risk, meaning that the current recovery might end up being short-lived for the leading cryptocurrency.
Earlier today, the price of the bellwether coin surged to an intraday high of $93,928, according to CoinGecko data.
In order for the W-bottom pattern to form, the cryptocurrency has to make a new low, then rebound to a resistance level. It then drops again to roughly the same low.
After the second low, the price rallies again, ideally breaking above the previous high (the middle peak of the W). The second bottom shows that sellers couldn’t push the price lower than before.
The price could stall or drop before reaching that target, which is likely what Bollinger meant about the “risk/reward setup” not being attractive.
The pattern is only confirmed if the price breaks above the middle peak.
As reported by U.Today, the cryptocurrency pulled off a V-shaped recovery after financial titan Vanguard added cryptocurrency exchange-traded funds to its platform in a stunning about-face.
However, commodity trader Peter Brandt recently cautioned that the leading cryptocurrency was still in a bear market, seemingly dismissing the recent rally as a dead cat bounce.
Mixed track record
In April, Bollinger tweeted that a classic Bollinger Band bottom was setting up in Bitcoin. He ended up being right, and the cryptocurrency experienced a massive rally after plunging to $74,000.
In October, however, he stated that Ethereum (ETH) and Solana (SOL) formed potential W-bottoms. These cryptocurrencies, however, ended up plummeting lower in November.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team