Legendary trader and technical analyst, John Bollinger, took to Twitter on Friday to highlight a noteworthy Bitcoin pattern.
Known for his creation of the Bollinger Bands, a popular tool among traders for analyzing volatility and price levels, Bollinger identified a classic sequence playing out on the chart: blastoff, rip through the upper band, consolidate, find support at the middle band, and turn higher.
For those less acquainted with Bollinger Bands, they are essentially a set of three lines plotted on a price chart. The middle band is a simple moving average, typically over 20 periods, and the upper and lower bands are plotted two standard deviations away from the middle band.
The bands expand and contract with volatility: when the market is volatile, the bands widen, and when the market is stable, the bands contract.Bollinger's tweet suggests that Bitcoin, whose price is currently sitting at $30,219, is now finding support at the middle band, historically an indicator that a price increase could be forthcoming.
Bollinger's pattern commences with a "blastoff," an aggressive price surge that results in a "rip through the upper band," where the price exceeds the upper Bollinger Band, indicating a strong upward momentum.
This is typically followed by a period of consolidation where the price stabilizes and corrects back toward the middle band. The pattern completes when the price finds support at the middle band and then turns higher again, suggesting a potential new wave of buying pressure.
Bitcoin's market cap currently stands at approximately $586.9 billion, with a 24-hour trading volume of nearly $14.8 billion, according to CoinGecko data.