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John Bollinger, a financial market trader and inventor of the highly recognized Bollinger Bands indicator, broke his silence on social networks with a new post. This time it was about the crypto market, and Litecoin in particular.
Bollinger posted a price chart for LTC, and, as he said, a picture is worth a thousand words. The choice of the caption is not random, as he wanted to use the Litecoin example to answer his followers' questions regarding Bollinger Band Squeezes and Head Fakes.
A Bollinger Band squeeze occurs when the bands tighten, signaling a period of low volatility. This often happens before big price changes, as the market builds momentum. Traders see this as a potential breakout point, where prices could rise or fall sharply once the squeeze is released.
From the picture is worth a thousand words department. I get a lot of questions about Bollinger Band Squeezes and Head Fakes. $LTSUSDhttps://t.co/fzdLvxee8F
— John Bollinger (@bbands) August 13, 2024
Meanwhile, head fakes are when the market looks like it is about to break out in one direction but then quickly reverses. This can catch traders off guard and lead to potential losses if they act on the initial breakout without confirmation.
Litecoin (LTC) price outlook
This is exactly what can be seen on the Litecoin price chart. At the end of July, the Bollinger Bands for LTC began to approach each other. At that time, the price rose above the upper band but quickly fell back below it.
As a result, the price of Litecoin began to plummet, and the bands broke away from each other.
After finding the bottom near the lower band, Litecoin rallied to around $63 per LTC amid the general market recovery. The next major test for the altcoin, if the Bollinger chart is to be believed, is at $65.
A break above this may give LTC a chance to test the upper band once again, which is currently at $75.