Bitcoin gains 6% as Bollinger Bands creator eyes W-shaped BTC price bottom

Current price activity could end up in bulls’ favor, says John Bollinger, with traders keenly awaiting an uptick which could liquidate shorters.

Bitcoin (BTC) could shoot higher if it completes a W-shaped bottom, says veteran analyst John Bollinger.

In a tweet on May 24, the Bollinger Bands creator told traders to “stay tuned” for a possible lucrative continuation signal on BTC/USD.

W-shaped bottom at “logical place”

Last week, Bollinger had called Bitcoin’s rebound from $30,000 to $42,000 “logical” given the significance of the latter price level. 

Now, he said, that upper bound could be forming the middle peak of a W-shaped price formation — a double-pronged bottom followed by an exit to the upside. 

In this situation, $30,000 was the first bottom and Sunday’s $31,000 dip the second.

“$BTCUSD is wokring on a short-term W bottom at a logical place,” he reiterated.

“The developing risk/reward looks good. Stay tuned for a trade opportunity… (no, not to me, to the markets).”

Bitcoin had gained around 6% on the day at the time of writing, hitting more than $38,000 before continuing to range on short timeframes.

In further commentary, popular trader Crypto Ed likewise included the “W” scenario as a potential outcome. The others were less bullish, namely a $37,000 focus or a fresh dip to $34,000

#BTC update
low TF
I’m seeing a 5 legs structure building here, which would imply more up after;
* a bit more up (37k?)
* an ABC correction (34k?)
* continuation up (41-42k) pic.twitter.com/uKptSiuNVz

— Crypto_Ed_NL (@Crypto_Ed_NL) May 24, 2021

Short squeeze demands build

On social media, meanwhile, other traders were hoping for a short squeeze to develop on Bitcoin after repeatedly punishments for long traders.

In a show of solidarity over the worst of the price dip being over, sources highighted negative funding rates across exchanges and a three-month low in open interest as suitable conditions for a bullish comeback.

Shorters would suffer from a breakout above the $42,000 mark in particular.

Scott Melker additionally cited relative strength index (RSI) flashing “oversold” as cause for optimism. As Cointelegraph reported, RSI is a key indicator for market rotations.

“Potentially have the oversold daily divergence with RSI that I have been waiting for,” he told Twitter followers.