With bitcoin (BTC) stuck in a narrow trading range for the 13th day in a row, the bulls need to force a move above $6,800 to confirm a breakout, according to the technical charts.
BTC has been restricted to a narrow range of $6,800 to $6,500 since Sept. 22 and this lack of clear directional bias has pushed the volatility reading to a 21-month low.
The daily volatility as represented by the Bollinger bandwidth – a technical analysis tool derived by dividing the gap between the Bollinger bands by price's moving average – has dropped to 0.078, its lowest level since December 2016.
A prolonged period of low volatility often paves way for a big move in either direction. So, it seems safe to say that BTC could soon witness a bullish or bearish breakout (though we have been saying this for a while now, and the big move is still to come).
At press time, the leading cryptocurrency is trading at $6,600, representing a 1.65 percent gain on the day.
The Bollinger bands (standard deviation of +2, -2 on the 20-day moving average) are moving in a sideways manner, indicating there is no clear trend in the bitcoin market.
For a bull breakout, BTC's price needs to find acceptance above the upper Bollinger band of $6,800. On the other hand, a move below the lower band at $6,290 would see the bears take charge.
Right now, the prospects of a downside break appear highest, as the cryptocurrency is again struggling to clear the 50-day exponential moving average (MA), currently located at $6,640.
- The immediate outlook remains neutral as long as BTC is trapped between the Bollinger bands.
- A UTC close above the upper Bollinger band of $6,800 would confirm a bullish breakout and would open up upside towards the September high of $7,429.
- A break below the lower Bollinger band of $6,290 would shift risk in favor of a re-test of the June low of $5,755.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.