Bitcoin price keeps sinking, but has kept mostly sideways leaving bears unable to break support to new lows. With the trading range at a pivotal point, as one trading legend often says it is “time to pay attention.”
The reason for the focus, is because what started as a fractal in price action, is now causing similar behavior in the Bollinger Bands that led to one of the most powerful pumps in Bitcoin history. Is that what’s next with bearish sentiment at such critical heights currently?
Pause In Downtrend Leaves Traders Confused, Market In Fear
Markets are cyclical and oftentimes sentiment lags behind price action. The recent uptrend in cryptocurrencies came to a pause when things were at their best – just as Coinbase Global went public, and prices were at all-time highs.
It wasn’t until more than 50% from the price per BTC was shed before investors started to become bearish on Bitcoin. Over the last several weeks since the big drop in May, a symmetrical triangle has been forming but it might not play out the way text book technical analysis would suggest.
Sentiment is at extreme fear and a technical indicator that can be used to forecasts bounces, the Bollinger Bands, looks a lot like the last time the market reached a pause in a new downtrend like this.
At that time, the creator of the tool, John Bollinger, warned it was now “time to pay attention” as trickery could soon reveal, and reveal it did.
Bitcoin “Squeeze” Could Lead To Epic Pump
With sentiment at the very worst and a sweep of lows now checked off the list, Bitcoin price could pump back higher to either retest or reclaim previous highs.
Price action has repeatedly wicked into the lower Bollinger Band without a big break, suggesting that this latest test of the lower band is a bear trap setup called the “Gimmee Bar” discovered by Joe Ross.
In 2019, the top cryptocurrency couldn’t recover the lost level, but the bull market is a lot different this time around. Holding the level here would result in the first major bull market correction of the rally continues from here.
If the level cannot be reclaimed, much like the China pump of late 2019 failed and led to new lows, so too will any unfinished recovery from here. Regardless of what happens, it is worth paying extra close attention the next several days until Bitcoin price choses a new direction.