A cryptocurrency analyst has pointed out that Bollinger Bands are squeezing on Dogecoin, suggesting that volatility may be coming for the memecoin.
Bollinger Bands Have Tightened On The Dogecoin Daily ChartThere are three “bands” that make up the indicator: the asset’s 20-day moving average (MA) and two standard deviations above and below this MA. Whenever these levels are close together, it means the price has recently shown stable action. Similarly, the bands being wide apart signals the presence of volatility in the market.
Besides serving as a gauge for volatility, the Bollinger Bands are also sometimes used to judge overpriced or underpriced conditions based on how close the asset is to the standard deviation bands. The price being near the upper level can signal the asset is overbought, while it being close to the lower one may indicate oversold conditions.
Now, here is the chart shared by Martinez that shows how the Dogecoin Bollinger Bands have recently behaved on the 1-day timeframe:
As displayed in the above graph, the Dogecoin Bollinger Bands have narrowed around the 1-day price, implying that the coin hasn’t shown much sharp price action recently. Generally, periods of little volatility are considered likely to unwind with sharp swings, so it’s possible that DOGE may be set up for a burst of volatility right now.
As for where a big move emerging out of this setup could take DOGE, it’s hard to say anything as the memecoin is currently trading right around the middle band, indicating that it’s currently neither overpriced nor underpriced, at least from the perspective of the Bollinger Bands.
At the time of writing, Dogecoin is floating around $0.09, down nearly 3% in the last 24 hours.
