Cointelegraph Team
Cointelegraph
A brief breakout into bullish territory for BTC/USD was a red herring, says John Bollinger, who is urging “caution” among traders.
Bitcoin (BTC) hitting highs of $10,300 this week isn’t a breakout and investors should brace for losses, renowned analyst John Bollinger has warned.
In a tweet on June 2, the Bollinger Bands indicator creator said that the largest cryptocurrency’s brief trip to three-month highs was an anomaly.
Bollinger to traders: be cautious or short
According to charts showing Bollinger band behavior for BTC/USD this week, the spike above $10,300 took the pair into territory which normally dictates an upcoming bull run.
Bollinger bands use two standard deviations to plot a boundary above and below a simple moving average price. Normally, this is the 20-day moving average.
When an asset price breaks out of the space between the two bands, the event suggests that volatility up or down is incoming. This behavior tends to be preceded by a narrowing of the band contours.
Bitcoin had stuck rigidly to the range between the two bands in May, indicating lower volatility. For Bollinger himself, there was no reason to heed the hint that this week’s breakout was genuine.
He tweeted:
“The is a Head Fake at the upper Bollinger Band for $btcusd, time to be cautious or short.”
BTC/USD chart showing recent “head fake.” Source: TradingView
Bitcoin’s own riot?
The indicator has previously shown efficiency in tracking Bitcoin bull and bear cycles, with the start of 2020 proving to be no exception. December saw a narrowing of the bands, followed by sustained upside as this year began.
Bollinger’s warning comes as Bitcoin appeared to gain from unrest in the United States and a drop in the value of the dollar. As Cointelegraph reported, the panic also fuelled gold, while any major gains for Bitcoin could rest on how events continue to unfold.
Fundamental strength is slowly recovering from weakness last month, with miner participation set to continue improving after a second negative difficulty adjustment in two days’ time.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.
Recommended Content
Editors’ Picks
Ripple wipes out weekly gains, experts comment on role of Ripple stablecoin
Ripple declined to $0.52 on Thursday, erasing all gains registered earlier this week. Ripple SVP Eric van Miltenburg’s comments on the firm’s stablecoin, and how it is expected to benefit the XRP Ledger and native token XRP have raised concerns among crypto experts.
Hedera HBAR slips nearly 10% after air is cleared on mistaken link with giant BlackRock
HBAR price is down nearly 10% on Thursday, partly erasing gains inspired by the misinterpreted link with BlackRock. Despite the recent correction, Hedera’s price is up 44% in the past seven days.
The reason behind Bonk’s 105% rise and if you should buy now Premium
Bonk price has shot up 105% in the past five weeks. A retracement into $0.0000216 or the $0.0000152 to $0.0000186 imbalance would be a good buying opportunity. Patient investors can expect double-digit gains from BONK that could extend up to 70%.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Bitcoin: BTC post-halving rally could be partially priced in Premium
Bitcoin (BTC) price briefly slipped below the $60,000 level for the last three days, attracting buyers in this area as the fourth BTC halving is due in a few hours. Is the halving priced in for Bitcoin? Or will the pioneer crypto note more gains in the coming days?