There aren’t many technical analysis indicators that are as well-known or utilised as the Bollinger Bands. These bands, which bear the name of its inventor, renowned trader John Bollinger, act as a gauge of volatility and probable price levels where an asset can encounter support or resistance. Bollinger recently used Twitter to discuss the state of the Bitcoin (BTC) market, succinctly writing: “SQUEEZE (says the python).”
This remark was made in connection to where Bitcoin is right now in relation to its Bollinger Bands. The Bollinger Bands indicator shows that the cryptocurrency is in a “squeeze,” which implies that it is trapped between the upper and lower bands. Such circumstances frequently signal large price changes, either upward or downward.
This “squeeze” is particularly intriguing when compared to the present Bitcoin market volume. A breakthrough move frequently occurs before a trending decline in trading volume. There is increasing pressure due to the tightening of the Bollinger Bands and declining volume. The price movement might abruptly burst in any direction, much like a coiled spring.
This possible change’s precise course is still unknown. Bollinger Bands can indicate bullish or bearish breakouts, and the direction relies on a number of other variables, such as the general market attitude, fundamental news, and market players’ reactions.
But traders who use Bollinger Bands for technical analysis keep an eye out for these “squeezes” since they could be precursors to impending price volatility. The bands’ contraction might be thought of as the quiet before the storm. Before the price moves significantly, there is a period of lower volatility, and this might mark a big turning point in the price of bitcoin.
