Why is BTC Bull Flag Holding Up So Far?
Now it is time to talk about the Bitcoin bull flag (BTF) because it has been holding up so far, but why? What is this BTF, and what is the reason behind its bullish behavior?
The BTF is a term used to describe a price movement that has been holding up for an extended period. It was coined by a trader, John Bollinger, who first used it in his book, Technical Analysis of the Futures Markets. The BTF is essentially a consolidation pattern. When it appears, it signals a change in trend and indicates that further gains are likely.
The BTF is defined as a three-day closing average that stays above a moving average. The BTF is also known as the Bollinger Band or the Bollinger Bands.
It’s important to note that this kind of indicator is a generalization of what the market is doing and is not the sole indicator of future price movements.
The BTF can be applied to many markets and is not limited to the trading of futures contracts.
How does the BTF work?
The Bollinger Bands are based on the standard deviation (SD) of price movement over a given period. The SD is a measure of volatility and is a valuable tool for analyzing price movement.
The SD is calculated by taking the square root of the variance.
The formula for calculating the SD is:
$$\text{SD} = \sqrt{\frac{1}{n}\sum_{i=1}^n (x_i - x_{avg})^2}$$
where:
$n$ = number of data points
$x_i$ = current value of the price at $i$th time point
$x_{avg}$ = average value of the price over a given time frame
Using this formula, the SD is calculated. This indicates how much the price has moved from the average price.
A high value of SD means higher price volatility and a low value of SD means less volatility.
If the SD is below 2, then the market is said to be in a trend. If it is between 2 and 20, then it is in a consolidation phase. If the SD is above 20, then the market is in a reversal phase.
It is important to note that the SD is a relative measure. A small SD indicates high volatility.
Example:
Let’s take the case of a stock that has been trading for one year.
If the stock was trading for $100 per share, then the SD would be around 10.
After one year, the share price may have increased to $150 per share.
If the SD is now 30, then it means that the volatility of the price has increased by a factor of three.
When the SD is above 20, the market is in a consolidation phase.
This is because the price is not moving a lot from its average. In this case.....