After another very similar finish to the week, BTC/USD is still waiting to break out of its multi-week trading range.
This move has been in the works for a long time, but so far there has been no incentive for the market to pull it off – the support and resistance areas have been left untouched.
All that could change this week – the list of economic data coming in the coming days is impressive as geopolitical instability escalates across Europe as the conflict between Russia and Ukraine escalates.
Meanwhile, Bitcoin is set to show its intentions in a bear market as the time approaches when the historical aggregate price bottom is formed.
Meanwhile, optimism for the bulls comes from inside sources, as the network fundamentals are set for a giant jump higher on the first trading day of the week on Wall Street.
With so many things to consider, Cointelegraph takes a look at the key questions to consider when planning your Bitcoin trading strategy for next week.
Volatility indicators indicate that price action is rare.
According to Cointelegraph Markets Pro and TradingView, the weekend went well for crypto market players.
Despite the added possibility of false breakouts due to low liquidity, the after-hours status quo remained the same as the previous days – limited movement in a familiar trading area.
The conclusion of the weekly candle, which reached just above $19,400, also came as no surprise, despite being the highest price for Bitcoin since mid-September.
On the weekly time frame, BTC/USD continues to form a series of candles where the market barely moves up or down – a classic sign that volatility is about to be produced.
Weekly candlestick chart BTC/USD (bit stamp). Source: TradingView
This breakout was already expected on the lower time frames and materialized on Friday when US employment data triggered short selling that cost the bulls the $20,000 mark.
Analysts are now looking for repeatable results over longer periods of time.
“It’s unusual to see bitcoin with historically low levels of volatility on high volume,” trader and entrepreneur Jordan Lindsey told Twitter followers at the end of the week.
“There’s a big movement up or down the road.”
Lindsey was referring to the narrowing of bitcoin’s trading range combined with increased trading volume – the latter being a key component of the ongoing breakouts.
This task is currently supported by the Bitcoin Historical Volatility Index (BVOL), an indicator designed to track volatility in its historical context.
Currently, BVOL has fallen to its lowest level only a handful of times since Bitcoin’s existence. A notable comparison took place in October 2018, just two months before the bottom of the $3,100 bear market in the previous cycle.
“It’s been below 36 twice lately and after that we’ve seen a very big move in the market,” commented Crypto Viking’s trading account, adding:
“It is currently below 36 again and this suggests that there will be a very big move soon this month or probably November.”
William Clemente, co-founder of digital asset and trading research firm Reflexivity Research, described the BVOL data as “remarkable.”
Thus, any sharp breakout of the range can be equated with a fall or a rally.
However, another Livecoin account noted that BTC/USD has a historical habit of consolidating longer than the market would like when volatility is very low.
“Bitcoin has reached levels of low volatility not seen in two years,” the trader and investor tweeted on October 9, adding:
“While it’s more reasonable to expect a big move now than ever, it’s also important to note that there have been two periods recently where Bitcoin spent over 40 days consolidating after reaching these levels.”
Bitcoin historical volatility index for 1 week. Source: TradingView
Meanwhile, an eerie pause is perhaps the best description of the atmosphere surrounding Bitcoin.
As noted trader Matthew Hyland summed up that day, “Does this market have a pulse?”
September CPI expects a generally busy week
Moving on to the broader economy, there are plenty of potential catalysts for the BTC price this week.
Economic data releases will be plentiful and fast starting on October 12, and with tensions in the Russian-Ukrainian war reaching new levels, the commodity euro remains on the curve.