According to a well-known analyst, the author of the indicator “Bollinger bands”, the growth of bitcoin above $10,000 does not mean that the trend will continue.
John Bollinger wrote on Twitter that the rapid breakout of the “bulls” is an anomaly, and now you need to trade very carefully:
“At the top of the Bollinger channel, a “False head” figure has formed on the BTC/USD chart. Now you should trade carefully, or enter short positions.”
The “Bollinger bands” indicator builds a channel with borders above and below the simple moving average for 20 days. When the price of an asset goes beyond the boundaries of this channel, it implies an increase in volatility. This event is usually preceded by a narrowing of the band contours. Bitcoin rigidly adhered to the range between the two bands in may, indicating lower volatility. According to the analyst, there is no reason that the break of the upper border of the channel was genuine.
Since the beginning of 2020, this indicator has accurately predicted the movement of the bitcoin exchange rate. So, in December 2019, the channel significantly narrowed, and this was a hint of a sharp increase in volatility, which happened at the beginning of this year.
Recall that on the night of June 2, the bitcoin exchange rate exceeded
$10,000. However, in the late afternoon of the same day, the exchange rate significantly decreased. At the time of publication, BTC is trading at $9,600.