Bitcoin experiencing its tightest Weekly Bollinger Band Width squeeze since 2012.
But before we dive into this, let's take a moment to get to know Bollinger Bands, which are a common tool in trading. These were created by John Bollinger back in the early 1980s to help us understand price volatility better.
So, what makes up Bollinger Bands?
If you'd like a visual, check this out:
- The Middle Band: Typically, it's a 20-period simple moving average (SMA). - The Upper Band: This one is calculated by adding twice the 20-period SMA's standard deviation to the middle band. - The Lower Band: And the lower band is found by subtracting twice the 20-period SMA's standard deviation from the middle band.
Now, let's talk about the Bollinger Band Width.
You can see it here:
This Width essentially measures the gap between the upper and lower Bollinger Bands. If it's narrow, it means low volatility, and if it's wider, it suggests higher volatility.
Okay, back to Bitcoin and its Weekly Bollinger Band Width Squeeze.
This recent phenomenon means that Bitcoin's weekly price volatility has tightened, reaching levels not seen since 2015-2016
So, what does this tightening mean? It implies that Bitcoin's price movements are getting more constrained, which might indicate that significant price swings are on the horizon. The last time Bitcoin went through such a squeeze was almost a decade ago, and it resulted in prices skyrocketing from $750 all the way up to $19,900.
For traders and investors, low volatility might seem uneventful, but it often comes just before big market shifts. Keep a close eye on things as those Bollinger Bands start to widen out; Bitcoin could be gearing up for some noteworthy price action.
To sum it up, Bitcoin's tightest Weekly Bollinger Band Width squeeze since 2012 hints at potential price increases. As traders gear up for what's next, it's a reminder that these calm periods can often lead to some pretty exciting opportunities.