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

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 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 May 23's $31,000 dip the second.

"$BTCUSD is working 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 other scenarios were less bullish, namely a $37,000 focus or a fresh dip to $34,000

#BTC updatelow 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 Bitcoin short squeeze to develop after repeated punishments for long traders.

In a show of solidarity over the worst of the price dip being over, sources highlighted 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.

Additionally, Scott Melker cited the relative strength index (RSI) flashing "oversold" as cause for optimism. As Cointelegraph reported, the 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.