Bitcoin may experience a surge in upside volatility, according to John Bollinger, the creator of the Bollinger Bands volatility indicator.
In a recent post on X (formerly Twitter), Bollinger pointed out that Bitcoin was poised for a significant breakout.
Bitcoin had reached new highs in September, challenging resistance levels that had eluded it since mid-August, as reported by data from Cointelegraph Markets Pro and TradingView.
Bollinger, however, found these developments encouraging, relying on his Bollinger Bands indicator, which utilizes standard deviation around a simple moving average to gauge price ranges and volatility.
Currently, BTC/USD is exhibiting daily candles that touch the upper band of the Bollinger Bands, which can signify an impending reversal back to the center band or a surge in upside volatility.
The recent narrow Bollinger Bands on Bitcoin contribute to the optimism that the latter scenario will prevail.
Bollinger noted, “And there is the first tag of the upper Bollinger Band after a new set of controlling bars was established at the lower band.”
However, he cautioned that it’s too early to predict if Bitcoin will continue its upward trajectory along the upper band.
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This narrowing of the Bollinger Bands was previously observed in July and preceded a return to lower price levels.
Bollinger’s analysis aligns with the sentiments of seasoned Bitcoin traders and analysts on shorter timeframes.
Despite the recent strength in Bitcoin’s performance, there is a sense of caution in the market.
Various trendlines that previously acted as support are still above the current spot price.
On-chain monitoring resource Material Indicators advised X subscribers to be skeptical of bullish momentum.
The commentary from Material Indicators highlighted the presence of technical resistance at the Key Moving Averages and support at the LL (likely low).
It suggested that Bitcoin might trade within a range and emphasized the importance of upcoming tests of R/S (Resistance/Support) levels to gain clarity about Bitcoin’s direction in the coming week.
Additionally, Material Indicators referenced the impending decision by the United States Federal Reserve regarding interest rates.
This decision could potentially introduce sudden volatility and unreliable short-term trading signals, further complicating Bitcoin’s near-term outlook.
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