Volatility is now almost certain, according to Matthew Hyland, who notes that Bitcoin's price signals are aligning. With Bitcoin trading at $42,704, signs of an imminent upward movement are evident, as highlighted by a seasoned market participant, Hyland, in a post on X (formerly Twitter) on December 27.


BTC/USD 1-hour chart. Source: TradingView

Despite Bitcoin experiencing a dip to $41,650 over Christmas, data from Cointelegraph Markets Pro and TradingView suggests a potential shift in momentum. Hyland identifies two crucial indicators, Bollinger Bands and the Relative Strength Index (RSI), pointing towards a short-term reversal. The tightening of the daily Bollinger Bands, coupled with the RSI reaching two-month lows, indicates the potential for a significant move.

Bollinger Bands, renowned for tracking BTC price action, are currently contracting on the daily timeframe after a period of expansion. This contraction, though not an immediate signal, typically precedes increased volatility. Hyland shares a chart illustrating the bands' comparatively narrow position.


BTC/USD chart with Bollinger bands data. Source: Matthew Hyland/X

The RSI, a momentum oscillator reflecting overbought or oversold conditions, has undergone a reset on daily timeframes in late December, currently standing at 53. This places it well below the "overbought" threshold of 70 and even further below its recent peak of 76. Longer timeframes present an optimistic outlook, echoing sentiments from veteran trader Peter Brandt.


BTC/USD 1-day chart with RSI. Source: TradingView

However, the Moving Average Convergence Divergence (MACD) on three-day timeframes poses a potential challenge for Bitcoin bulls. It hints at a bearish trend flip, with Hyland emphasizing that several days remain for the signal to potentially reverse due to price action.


BTC/USD 3-day chart with MACD. Source: TradingView

In conclusion, while Bollinger Bands and RSI signal a possible bullish move for Bitcoin, the MACD introduces an element of uncertainty, leaving the market participants cautiously optimistic about the cryptocurrency's near-term prospects.