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Home Cryptocurrency news Bitcoin

“Upside Reversal” In Bitcoin Possible, Here’s What To Watch For

Tony Spilotro by Tony Spilotro
6 months ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 3min read
bitcoin upside reversal john bollinger bands

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Yesterday, Bitcoin suffered a crash that took the asset back down to $11,107 at the low on Coinbase. After a small rebound leaving a wick behind, BTCUSD closed the daily back inside the Bollinger Bands, potentially preventing further downside.

It has the indicator’s creator on the lookout for an “upside reversal” in the first-ever cryptocurrency before initiating a long trade. But what exactly should traders and investors look for to signal that an upside reversal is taking place?

John Bollinger Calls Out Potential BTCUSD Upside Reversal After Fall To Bottom BB

Financial analyst John Bollinger has been trading for decades. He created a tool bearing his name that can be used for all kinds of technical analysis.

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It is among the most versatile, and therefore commonly used tools today. The Bollinger Bands measure volatility and supply a moving average to follow for potential resistance and support, as well as two standard deviations of that moving average that also act as resistance or support.

When assets close outside of the bands, the move often picks up in ferocity – something that Bitcoin bulls managed to narrowly escape just moments before yesterday’s daily candle close.

Related Reading | Analyst Who Predicted Bitcoin’s 40% October Rally Warns of BTC “Head Fake”

After Bitcoin touched the bottom band, the asset bounced leaving nothing but a wick behind. BTCUSD closed the daily back in the bands, which could signal a reversal is underway.

Bollinger, who often comments on Bitcoin and other assets, told the world via Twitter that he’s “looking for a upside reversal” in Bitcoin before taking a long position. Long trades are a position in which traders expect the price to go up, and profit if they are correct.

But there are certain conditions that must be met for the Bollinger Bands to signal an upside reversal.

bollinger bands bitcoin btcusd john bollinger tweet bbands twitter

BTCUSD John Bollinger Tweet: "Looking for a upside reversal here to initiate a long" | Source: TradingView

What An Upside Reveral In Bitcoin Looks Like, According To The Bollinger Bands

The first major step in a reversal, according to how the Bollinger Bands work, is a close back inside the bands. Bitcoin bulls already accomplished this feat with yesterday’s daily close.

Had they not, bears could have potentially “rode the bands” back down to far deeper lows. In an opposite example, after Bitcoin broke out through $10,000 resistance in late July, BTCUSD bulls rode the bands all the way up over $12,000 before the asset closed back inside the bands.

It is not uncommon for assets to test the same top or bottom band twice before reversing. Bitcoin has now had two tests of the top bands, which rejected the asset back down through the mid-BB, all the way to the bottom BB where it is holding support.

bollinger bands bitcoin btcusd target

BTCUSD Bollinger Bands Mid-BB Short-Term Reversal Target | Source: TradingView

Another test of the bottom BB is possible, however, if Bitcoin can make it back up through the mid-BB line like it did above, the upside reversal John Bollinger is looking for becomes much more likely.

BTCUSD holding an added retest of the mid-BB also would bring more confirmation before taking a position.

Related Reading | Time To Pay Attention: Indicator Hints At 50% Or More Correction In Ethereum

If Bitcoin price can make it through the mid-BB, hold any retests, and push back up into the top BB, we may see a repeat of the last consolidation phase thanks to a fractal forming.

bollinger bands bitcoin btcusd target

BTCUSD Bollinger Bands Full Upside Reversal Target | Source: TradingView

After topping, a downtrend line brought BTCUSD to the lower BB. This “head fake” as Bollinger calls them, surprised traders when Bitcoin reversed back toward new highs. Could the same sort of scenario happen again?

If so, upside targets reach over $15,000, setting a new higher high on longer timeframes – the signature of a continued and sustainable uptrend.

Tags: bitcoinbtcbtcusdBTCUSDTcryptoxbtxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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