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Bitcoins volatility has hit its lowest level in over four months a price squeeze that may force a significant move either way.<\/p>\n
BTCs bull run stalled at highs above $13,800 on June 26 and prices have created lower highs and higher lows ever since.<\/p>\n
Notably, the trading range has narrowed sharply over the last two weeks, with bitcoin consolidating between $9,850 and 10,950, as per Bitstamp data.<\/p>\n
As a result, the Bollinger bands volatility indicators placed 2 standard deviations above and below the prices 20-day moving average have narrowed sharply.<\/p>\n
More importantly, Bollinger bandwidth, an indicator used to gauge market volatility, has dropped to 0.11 the lowest reading since May. 3, as seen in the chart below.<\/p>\n<\/p>\n
The volatility level has dropped steadily from 0.62 to lows near 0.10 in the 2.5-months.<\/p>\n
In the past, BTC has witnessed big moves following drops to or below 0.10 (marked by arrows).<\/p>\n
For instance, the bandwidth dropped to 0.06 a week before BTC broke into a bull market with a high-volume move to $5,000 on April 2. It also fell to 0.10 on May 2 a day before BTC jumped above $5,600, marking an upside break of a three-week-long consolidation. And, in the days leading up to last Novembers sell-off below $6,000, volatility dropped to 0.05.<\/p>\n
If history is a guide, then BTC could soon witness a big move on either side. Technical analysis theory also states than an extended period of low volatility is often followed by a big move.<\/p>\n
While the record high hash rate (miner confidence) is calling a bullish move, the technical charts are beginning to favor the bears.<\/p>\n
As of writing, BTC is changing hands at $10,170 on Bitstamp, representing little change on a 24-hour basis.<\/p>\n<\/p>\n
Bitcoin jumped 2.6 percent on Sept. 12, confirming an upside break of a falling wedge pattern. The bullish breakout, however, failed to draw bids and the cryptocurrency has ended up creating another lower high at $10,458 (Sept. 13 high).<\/p>\n
With the failed breakout, the bearish view put forward by Sept. 6s big red engulfing candle has gained credence.<\/p>\n
BTC risks falling back to the Sept. 11 low of $9,855 in the short-term. A violation there would open the doors for $9,320 (Aug. 29 low).<\/p>\n
A few observers are calling for a deeper drop to levels below $8,000. That possibility cannot be ruled out as the cryptocurrency is looking heavy on the longer duration charts.<\/p>\n<\/p>\n
The back-to-back inside bar candlestick patterns on the monthly chart (above left) indicate buyer exhaustion following a stellar rally from $4,000 to $13,880.<\/p>\n
A bearish inside bar reversal would be confirmed if prices close (UTC) below $9,049 the low of the first inside bar created in July on Sept. 30.<\/p>\n
Further, a negative reading on the weekly moving average convergence divergence (MACD) indicates scope for a deeper pullback.<\/p>\n
The bearish case would weaken if prices rise above $10,956 (Aug. 20 high), invalidating the lower highs setup on the daily chart.<\/p>\n
That said, a weekly close (Sunday, UTC) above $12,000 is needed for bull revival, as discussed last month.<\/p>\n
Disclosure:The author holds no cryptocurrency assetsat the time of writing.<\/p>\n
Bitcoinimage via Shutterstock;charts byTrading View<\/p>\n
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Bitcoin May Be Building for Move as Price Volatility Nears 5-Month Low - CoinDesk<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" View Bitcoins volatility has hit its lowest level in over four months a price squeeze that may force a significant move either way. Continue reading