According to U.Today, John Bollinger, the financial market trader and inventor of the Bollinger Bands indicator, recently shared his insights on the crypto market, focusing on Litecoin (LTC). Bollinger posted a price chart for LTC on social media, using it to explain the concepts of Bollinger Band Squeezes and Head Fakes to his followers.
A Bollinger Band squeeze occurs when the bands tighten, indicating a period of low volatility. This often precedes significant price changes as the market gains momentum. Traders view this as a potential breakout point, where prices could rise or fall sharply once the squeeze is released. Conversely, head fakes happen when the market appears to break out in one direction but then quickly reverses, potentially leading to losses for traders who act on the initial breakout without confirmation.
Bollinger's analysis of the Litecoin price chart shows that at the end of July, the Bollinger Bands for LTC began to converge. During this period, the price briefly rose above the upper band but then quickly fell back below it. This led to a decline in Litecoin's price, causing the bands to diverge again. After hitting a low near the lower band, Litecoin rallied to around $63 per LTC amid a general market recovery. According to Bollinger's chart, the next significant test for Litecoin is at $65. A break above this level could allow LTC to test the upper band again, which is currently at $75.