Why Bitcoin Risks a 40% Correction After its Retest of Bollinger Band Mid-Line

Tony "The Bull" Severino

5 years ago

2 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Bitcoin price is at a critical moment in its market cycle. And although it’s been said dozens of times before, the next move could choose the trend direction for months to come.

At this very moment, the asset is testing a level that in the past, rejection has caused a 40% drop on average. Will the first-ever cryptocurrency make it though the key resistance, or will another 40% collapse follow?

Bollinger Bands May Hold the Key To Bitcoin Bull Run

Bitcoin price has been trading sideways for months now, reaching historic low levels of volatility. The price action is a stark contrast to the large peaks and troughs investors in the asset class is used to.

The wild price swings of the last year have now stagnated, suggesting a major move is coming.

Bollinger Band Width, a metric measuring volatility or a lack thereof, has plummeted to record low levels. In the past, these lows have resulted in a major break of volatility.

The last time volatility was this low, was prior to the 2019 Bitcoin rally that took the asset to $14,000.

Also according to past price action, the asset has been strongly rejected from the middle Bollinger Band line.

Bitcoin price is once again trading just beneath the middle line on the Bollinger Bands. In the past, rejection from this key resistance level has resulted in an average of 40% decline.

Bitcoin BTCUSD 3D Bollinger Bands | Source: TradingView

Mid-BB Retest on 3D BTCUSD Leads To 40% Decline on Average, Black Thursday Drop

According to the Bollinger Bands, a popular technical analysis indicator, a strong rejection could occur. Past rejections at this level, have resulted in an over 40% decline on average.

Even more frightening for Bitcoin investors, the asset rejecting at the mid-BB line on the 3-day timeframe the last time around, resulted in Black Thursday.

Bitcoin price collapsed by over 50% following that rejection, taking the rest of the crypto market down with it. It also kicked off a correlation with the stock market that hasn’t boded well for cryptocurrencies.

Another 40% rejection from here, would take Bitcoin price back to as low as $5,600, where support must hold.

Support holding there, would result in a higher low, and put the asset back on track towards an uptrend. However, if that support level cannot hold, and the rejection gets even more severe than Black Thursday, a new bear market low could be set.

Bollinger Bands are used in a variety of ways, but a break below or above the middle-band, an exponential moving average, can act as a powerful buy or sell signal.

The moving average can also act as support or resistance. If the middle Bollinger Band line holds strong as resistance, another drop in Bitcoin could be next.

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.