Bitcoin Bulls Encounter Headwinds as Monthly Stochastic Indicator Trends Downward: Analyst
Bitcoin's Most Oversold Levels Since Covid Crash Indicated by Key Metrics
Bitcoin and U.S. Real Yields Forge Strongest Inverse Link Since April
Dogecoin (DOGE), the cryptocurrency that gained popularity as a meme and is renowned for its volatile price fluctuations, has exhibited an uncharacteristic level of stability throughout this year, falling significantly behind the market frontrunners bitcoin (BTC) and ether (ETH).
The Bollinger bandwidth, a popular technical analysis indicator, hints at a period of unusual calmness in Dogecoin (DOGE), potentially signaling an impending storm on the horizon.
The indicator demonstrates different levels of volatility compared to price fluctuations, and it is computed by dividing the difference between the Bollinger bands by the 20-day simple moving average (SMA) of the cryptocurrency's price. Bollinger bands represent volatility boundaries set at two standard deviations above and below the 20-day SMA average of prices.
During periods of increasing volatility, there is a noticeable expansion in the separation between the two bands, leading to a wider bandwidth. Conversely, when volatility subsides, the two bands converge, resulting in a narrower or declining width.
An abnormally wide or high bandwidth often indicates that the current bullish or bearish trend is approaching its conclusion. Conversely, when the bandwidth is exceptionally low, it suggests that the market may be on the verge of making a significant move in either direction. This observation aligns with Fidelity's perspective.
When the bandwidth reaches excessively high levels, it indicates a potential conclusion of the current bullish or bearish trend. Conversely, an unusually low bandwidth implies that the market is likely to break out of a consolidation pattern with a significant move in one direction, as explained by Fidelity.
According to TradingView, the daily chart of Dogecoin indicates a recent tightening of the bands, resulting in a bandwidth of 0.06. This is the lowest level observed since February 2019.
Therefore, Dogecoin may experience a surge in volatility soon, as the bandwidth has a tendency to alternate between expansion and contraction. It's important to note that this anticipated increase in volatility is independent of the price direction, which means that the significant movement can either be bearish or bullish.
As of the current time, Dogecoin is trading around $0.073. Despite being the prominent meme cryptocurrency with a market value of $10.22 billion, it has only experienced a 3% increase in value this year. In comparison, Bitcoin and Ether, the market leaders, have witnessed significant gains of 68% and 60% respectively, according to CoinCryptoUs data.
