thetradingparrot
patreon
Can Bollinger Bands tell us what's next for with Bitcoin? + bots running + news
🕑 Added 2021-07-13 13:45:07 +0000 UTCFirst of all it's great to be back from a very refreshing and overdue week of holidays. One thing is to do what you love but it's been the most dedicated and passionate 6 months ever . I think it was a great decision to take a break during this slow market to recharge batteries and prepare for what's next. We have now an army of bots and tools for bull and bear market, and so much to come! I really can't wait to start showing you guys.
Let's start with Bitcoin.
Bollinger bands width WHAT!?
Bollinger bands is one of the most popular TA indicators out there along with RSI and moving averages.
BB is used primarily for identifying good entries or exits from trades. It can be used on lower and higher timeframes too.
BB uses a moving average as the central line and standard deviation (1 or 2) to plot two bands: an upper and a lower band.
Most traders would use these two bands to enter a trade when the close price crosses each band depending if it's a long or a short position.
But there's something many traders tend to ignore even though it can tell us a lot about the next big move of an asset: the Bollinger band width on a higher timeframe. The width of BB is calculated by the distance between the upper and lower band.
Why is the width of BB useful?
The width represents volatility. The tighter the width is, the more energy is being accumulated ready for a potential explosive move. The problem is that this width won't tell us whether is to the downside or to the upside. For that we can look into the statistics.
Let's have a look at the historic values of the BB width
In the chart above you can see the BTC daily chart.
The BB width is the oscillator plot below the BTC price.
The yellow line shows the range of BBW between 0.10 to 0.12. This range has been reached around 10 times in total in bitcoin history.
BEAR vs BULL move
Each and every time it resulted in a massive move.
3 times to the downside, 6 times to the upside.
So we have a 1 to 2 ratio in favour of bull moves.
But also, if you notice the pattern has been so far:
{BEAR, BULL, BULL} {BEAR, BULL, BULL} {BEAR, BULL, BULL} --> BEAR now?
If this pattern is respected it would be indicating another BEAR move is coming.
Expected time to trigger
If you look carefully, from the time we enter the BBW between 0.10 to 0.12 to the time we start the aggressive move it has taken in order: 44, 15, 16, 6, 4, 29, 39, 21 days.
We crossed below 0.12 about 2 days ago. This tells us that we have from 2 to 42 days to make an aggressive move if we followed the historic values.
Many influencers are using the current BBW squeeze to convince people that the move is "about to happen". Can it? yes. Anything is possible, but the statistics indicate that is more probable that this happens after an average of 21 days, min 4, max 44.
That still qualifies as "very soon" but it's not like it's going to be tomorrow necessarily, so be prepared for either scenario.
Historic magnitude of the move
Historically after entering the 0.10 to 0.12 range of BBW, bitcoin has done moves from 19% to 530%.
In historic order (from the chart above):
-50.74%, 19.42%, 165%, -26.64%, 39.14%, 55.7%, -62.11%, 35.26%, 530%
How do I react/use this information?
I'm personally following the trend of the market. Market is bearish in the daily and lower timeframes.
On the weekly we haven't yet invalidated the bull run and in theory we can still close the current weekly candle on top of the last band of the EMA ribbon (see chart below). That would allow us to dodge another dump.
There's just too much information at the moment: FUD, miners hash-rate resuming, fees, numbers of shorts in decline, new countries entering legal tender, Apple buying BTC, etc, etc, but overall I still think we are in consolidation/bearish low-timeframe.
I believe another drop to lower levels is likely and I see it as beneficial to trigger an exit from the current boring price actions we are seeing. Hitting 24K or lower is going to get many people excited to enter at discount prices and many others will pull out, allowing the flow from weaker to stronger hands, that has been historically the ultimate bull flag to finally trigger.
Which bots am I running?
I need to do loads of home cleaning. With all the noise from Binance, I need to move some funds around to a new Binance account, some to Huobi and some to FTX. I'm still planning to use Binance, but I want to spread the risks by diversifying a bit more.
I'm planning to keep the same bots we've been running last week and adding a few extra.
I'll be adding them shortly to the dashboard, but if you are interested here's a sneak peak:
- ADA, MATIC, AVAX, BTC and ETH short bots. Basically I used 15% of my capital to add to my long term holdings on these tokens which I believe will make big moves in 2021. At the moment I have my funds out of binance so I haven't yet been able to use any "TA presets" deal start conditions for the short bots. I'm then forced for now to use "start deal ASAP" together with a very conservative DCA setting. Here's an example. I wouldn't copy it just yet. As I mentioned I want to work on these, do some backtesting, get the funds back in my new binance account, so that's going to take a few days. Even if this bot is not benefiting from TA presets yet, it's catching some gains with each movement so I'm happy still :)
- Martyn on BTC and ETH. I really want to accumulate as much as possible during this period but while being careful to not run out of USDT as there can be another big dump and I don't want to miss it out. If the dump doesn't actually happen then I will use that cash for other bots.
- I'll switch back on some MC futures bots asap too. I first need to catch up with Matsoftware asap to see if we are getting close to supporting MC futures signals on other exchanges too like FTX, ByBit, Huobi, etc. This would be great, I'm personally keen to try them on Bybit.
I have loads of other news so stay tuned!
Comments
I missed you, welcome back.
Welcome back, I hope you will make us all rich! :)
Welcome back , can’t wait to see those new bot updates
