Before we get into specifics, first, there’s a couple of facts regarding the recent downfall of BTC:
- Earlier today, the price of Bitcoin fell to $9,600
- The Bollinger band breakdown meant that the Bitcoin will probably slide to $9,320
- Something of the utmost importance is that the break above $10,380 is mandatory to neutralize the bearish setup
The recent low-volatility price squeeze of the biggest cryptocurrency right now, the Bitcoin, has unfortunately ended with a downside break which is probably going to result in an August low of exactly $9,320. The BTC has been trading in a quite narrow range, from $9,600 to $10,500 in a span of eleven days to the 21st September of this year. That resulted that the price volatility of the Bitcoin has reached its lowest level in the previous four months last week. The Bollinger bands represent the two volatility indicators which happen to be placed two standard deviations beneath and also above the price’s simple moving average in a period of 20 days.
The period of volatility usually means that a big move on both sides is quite possible. In the case of the Bitcoin, that big move was directed downwards, unfortunately. On Monday, the price of BTC has fallen by exactly 3.38%. That was the biggest loss in one day since the 29th of August, according to the data of Bitstamp. Also, it closed quite beneath the lower Bollinger band.
Today, at the early morning, the price hit a low of $9.6K, and it is trading beneath the lower Bollinger band, right now, somewhere around $9,767. The conclusion is that sellers take the victory this time in a clash with the bulls and a new low will probably happen very soon. At the moment, BTC trades at $9,730. On the 21st of September, the spread between two Bollinger bands has been narrowed to precisely $656. Since May, it hasn’t been that low- it is a squeeze which has resulted in a complete price breakdown.
But, there’s no time for big discouragements, because Bitcoin is aiming to hit the support at $9,320 in the next few days, which is great news. Also, this famous cryptocurrency could find the support at the level of $9,388- which would be at the lower edge of three months of the contracting triangle.
To make the bearish case stronger is the sub-50 reading on the strength index of a period of 14 days. To add, if a UTC close beneath $9,388 happens, it would only confirm an unfortunate triangle breakdown, and it could also yield a deeper sell-off beneath the level of $9,000. That bearish outlook won’t mean too much if the price of the BTC goes above $10,380- which represented the peak of the bullish hammer on September 19th. It is important that a break happens, just above the upper edge of the three-month contracting triangle, which is now at $10,692. That is needed to successfully revive the bullish outlook and bring stability to the greatest cryptocurrency, the Bitcoin.