Bitcoin (BTC) is expected to have large price fluctuations in the coming sessions as the price fluctuation has reached its lowest in more than a month.
The benchmark cryptocurrency has seen lower highs and lower lows (chock) since early January, and the lack of strong market bias has caused both bears and bulls to look for clues. As a result, volatility represented by the Bollinger Bandwidth, a technical instrument represented by +2, -2 standard deviation of an asset’s moving average, reached its levels at the end of December.
It is worth emphasizing that a prolonged period of low volatility typically paves the way for a stronger directional bias. This means that Bitcoin may soon be witnessing major price movements in both directions.
Signs of the rise in Bitcoin
Independent trading firm TradingShot analysts believe the cryptocurrency will rise based on its 50-period moving average. The BTC / USD market has recently closed above that wave, recalling its ability to reverse the wild bull rally.
TradingShot noted the same in its final note, calling the 50-period moving average “an important short term indicator”.
“It provided excellent support in Bitcoin’s parabolic rise in late 2020,” analysts added. “Actually, as you can see in the graph below, we can count 15 net jumps since October 2020 and it has only been broken 2 times.”
Now, they expect Bitcoin to experience a “sustainable uptrend” in February if the 50-period moving average is strong. Meanwhile, TradingShot claimed that Bitcoin’s LMACD indicator warned of a bullish transition that further fueled the upward trend in the cryptocurrency market.
Bitcoin is currently trying to close above the 200-period moving average wave (orange) to confirm its extended bullish trend. A successful breakout move will have test levels of over $ 40,000 as the bulls’ primary targets amid high volatility.
Bitcoin daily chart
Meanwhile, Bitcoin’s daily chart shows the price trying to move above the middle band of the Bollinger Bands, which represents the 21-day moving average.
Bitcoin is closing above the 21-day moving average. Source: BTCUSD on TradingView.com
A successful breakout above will allow traders to test the upper Bollinger Band as their short-term upside target. Close to $ 38,500. Conversely, a pullback from the middle band risks sending the price back to the lower $ 31,000.