It’s been about one month since we last looked at the King of Cryptocurrencies. Back then, we took a look at the chart, noticed a potentially bearish pattern, and figured the next big move for Bitcoin would be to the downside.
So far… not much has happened. Bitcoin was at $10,325 per coin on August 28. At writing, it’s at $10,065.
Yes, the price has fallen. But it’s hardly been a “big move.”
However, energy is building. And now, Bitcoin is on the verge of a HUGE move.
Here’s the chart of Bitcoin along with its Bollinger Bands…
Normally, Bollinger Bands are used to identify the most probable trading range for a stock or an index. But, they can also be useful in determining when a chart is setting up to make a big move. That’s because Bollinger Bands expand and contract depending upon the volatility of a chart.
And, as we’ve preached quite often here in Market Minute, periods of low volatility are always followed by periods of high volatility – and vice versa. We can rephrase that statement to say periods of contracting Bollinger Bands are always followed by periods of expanding Bollinger Bands, and vice versa.
The blue arrows on the chart point to times when the Bitcoin Bollinger Bands pinched quite closely together. The previous two occurrences led to big moves in the cryptocurrency.
The price of Bitcoin fell almost 50% after the Bollinger Bands pinched together last October. And, after the bands pinched together again in March, Bitcoin rallied 200%.
Well… here we go again. As you can see on the chart, the Bollinger Bands on Bitcoin are starting to pinch together right now. This condition might last for a few weeks, or the bands might start expanding right away. But, once Bitcoin starts to make a move, it’s going to be a big move.
For the moment, and for the reasons I expressed last month, I suspect that move will be to the downside. But, traders should respect a move in either direction.
A move to the downside could test the support of the mid-May low at about $7,000. While an upside breakout could propel Bitcoin back to $13,000.
Best regards and good trading,
P.S. Recently, my colleague Teeka Tiwari made the case for Bitcoin running much higher in the months and years to come. And he says that one strange, specific event all but guarantees this to happen…
He revealed all the details in a live webinar last Wednesday – 5 Coins to $5 Million. And not only that… Teeka gave away the name of another, smaller cryptocurrency with massive potential.
The presentation is still online, but it won’t be for long. Be sure to check it out right here, while you still can.