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A well-known figure in financial markets, John Bollinger, the inventor of the popular technical analysis tool Bollinger Bands, broke his silence on social media regarding the cryptocurrency market with a notable post about Litecoin (LTC). Bollinger attached a Litecoin price chart to his post and stated that he wanted to explain the concepts of Bollinger Band Squeeze and Head Fake to his followers.
Explaining Squeeze and Head Fake Movements Using the Litecoin Example
Bollinger Band Squeeze occurs during periods when the bands come closer together and volatility is low. These squeezes often signal significant price changes as the market accumulates momentum during this period. Bollinger highlighted the sudden price movements following such a squeeze using the example of Litecoin.
On the other hand, Head Fake refers to situations where the market appears to break in one direction but suddenly moves in the opposite direction. Such movements can lead to significant losses for hasty investors. Bollinger warned investors not to make decisions based solely on initial breakouts.
Litecoin’s price chart supports Bollinger’s explanations with a concrete example. At the end of July, Litecoin experienced a squeeze between the Bollinger Bands, and although the price seemed to rise towards the upper band, it quickly pulled back. This situation perfectly exemplified Bollinger’s Head Fake definition.
65 Dollars is a Critical Threshold for Litecoin
After this movement, Litecoin’s price began to fall, and the bands widened again. Litecoin hit a low near the lower band and then recovered to around 63 dollars. According to Bollinger’s chart, the altcoin will face its next major test at the 65-dollar level. If this level can be broken, it may make another attempt towards the upper band, around 75 dollars.
According to current data, LTC is trading at 63.69 dollars, up 0.33% in the last 24 hours.
