Bitcoin Bollinger Band Breakout Begins to Squeeze Shorts
In this episode of NewsBTC’s daily technical analysis videos, we take a look at the ongoing Bitcoin price breakout above the upper Bollinger Band on daily BTCUSD charts and provide some insight into what the next targets might be.
Check out the video below:
VIDEO: Bitcoin (BTCUSD) Price Analysis: October 26, 2022
The breakout across crypto has already resulted in a significant amount of shorts being liquidated. How Far Can This Bitcoin Rally Run?
Bitcoin rally nears middle of trading range
The Bitcoin price is now the midpoint of a horizontal trading range, making it a natural stop for profit taking and for drawing in a new set of short positions. Going through the median would result in another attempt at around $25K.
More importantly, the Bitcoin price continues to make a strong push outside the Bollinger Bands on daily time frames. After tightening for so long, and now starting to widen, the rally may have more legs than the bears expect.
BTC is attempting to break through the median of a the trading range | Source: BTCUSD on TradingView.com
Related Reading: Can Bitcoin End Crypto Winter? | BTCUSD Analysis October 24, 2022
BTCUSD weekly hit resistance at Middle Bollinger Band
That is because the Bitcoin price has already found and met resistance at the mid-Bollinger Band on weekly time frames. The key resistance level at the 20-week SMA was where I placed a hedge short entry today in case the rally is rejected instead.
If there is no rejection and Bitcoin continues to rise, we could be looking at a full-fledged return to a crypto bull run. Zooming out shows how important a weekly close above the middle Bollinger Band would be.
Turning on Bollinger Band Width shows that the bands are some of the tightest ever. The last two instances were before the 50% crash to the bottom of the 2018 bear market. Before that was before the epic 2017 Bitcoin bull run that made the cryptocurrency a household name.
Importantly, in 2018 the Bitcoin price was below the middle of the Bollinger band, while in 2016 it was above the middle of the BB. The trend is more likely to continue on that side of the mid-BB price. If the weekly BTCUSD chart closes above the middle band and holds, it could be back to the races for Bitcoin bulls.
Crypto profit targets to watch for using Ichimoku
Back to the weekly Bollinger Bands, for a sense of what happens if BTCUSD were to break through the middle of the BB. The upper band would be the next logical target, located at $23,800. Just as Bitcoin has done on daily time frames, it is possible to push outside the upper band given the large short interest in the market.
Interchanging Bollinger Bands with Ichimoku on the same weekly timeframe also tells us a lot about what might happen next. Bitcoin price is pushing above the Tenkan sen, making the next major resistance level the Kijun sen which is at $32,000. In 2018 we can see that the two lines were much closer together, but anything is possible with so much energy built up in the market.
During the first refutation from the bottom of the bear market in 2018, the Bitcoin price pushed well outside the top of the cloud, only to break out of it, but finally lose it again on Black Thursday 2020. If the Bitcoin price were to reach the top of the cloud , the rally could be stopped at $43,000. Once you’re above the cloud, all that’s left for Bitcoin is the moon.
