Little Known 'Choppiness Index' Could Warn of Bitcoin Price Breakout

Timing an expected bitcoin price breakout after a prolonged period of consolidation is challenging, but a technical tool called the "Choppiness index" may offer some insight.

Having a tool which might indicate that BTC is in the early stages of a big move would boost traders' ability to time the impending breakout.

One such technical tool is the "Choppiness index," which oscillates between 0.00 and 100.00.

Notably, the 68.2 level can be used to determine range breakout too.

The choppiness index is currently holding above 61.8, meaning the bitcoin market has remained stuck in range for a long period.

Traders should watch for a move below 61.8 - considered an early indication that an asset is preparing for a direction breakout.

As of writing, the index is located at 63.00.

View Bullish breakout scenario: BTC's move above the stiff resistance of 50-day EMA of $6,640, if accompanied by a drop in the choppiness index below 61.8, could be an indication the cryptocurrency is aiming for a break above the upper Bollinger band of $6,806.

Bearish breakdown scenario: BTC's move below the immediate support of $6,424, if backed by a drop in the choppiness index below 61.8, would allow a break below the lower Bollinger band of $6,293.

It is worth noting that the choppiness index is not a directional indicator and only indicates whether a market is trending or ranging.