John Bollinger has labeled Bitcoin’s move to approximately $10,400 as a head fake.
Mr. Bollinger advises traders and investors to be cautious henceforth or to short BTC.
Traders and investors might get a cheaper Bitcoin in the coming days.
The Inventor of Bolling Bands, John Bollinger, has once again provided valuable insight into the current price movement of Bitcoin. In a Tweet earlier today, Mr. Bollinger classified BTC’s price movement to approximately $10,400 as a Head Fake. Additionally, he advised traders and investors to be cautious while trading BTC henceforth. Mr. Bollinger additionally explained shorting was an option for those comfortable doing so. His tweet can be found below.
The is a Head Fake at the upper Bollinger Band for $btcusd, time to be cautious or short.
— John Bollinger (@bbands) June 2, 2020
More on a Head Fake
The easiest way to understand a Head Fake is by using popular sports such as rugby, American football or basketball. In these sports, a head fake is defined when a player implies moving to one direction with his head, only for his feet to move in the opposite direction.
Therefore, a head fake in trading is when an asset implies to move in one direction only to reverse course and sometimes violently as seen with Bitcoin’s recent dip. According to John Bollinger, a head fake occurs when:
…prices break a band, then suddenly reverse and move the other way, similar to a bull or bear trap.
A bullish head fake starts when Bollinger Bands contract and prices break above the upper band. This bullish signal does not last long because prices quickly move back below the upper band and proceed to break the lower band.
A bearish head fake starts when Bollinger Bands contract and prices break below the lower band. This bearish signal does not last long because prices quickly move back above the lower band and proceed to break the upper band.
What Next for Bitcoin?
With the Bitcoin halving firmly behind us and with the additional advice from Mr. Bollinger, we can conclude that BTC might experience a bear cycle in the coming days or weeks. On a macro level, the major support zones for Bitcoin can be found at the following prices.
Additionally, a few traders and investors are of the opinion that Bitcoin will retest the $7K levels one more time. For example, popular Bitcoin analyst, Josh Rager, has expressed this idea of BTC in the $7,000s range as seen via the tweet.
Call me selfish but I'd love to see $BTC price back down in the $7ks one last time before the charge to new highs
— Josh Rager (@Josh_Rager) June 3, 2020