XRP’s Bollinger Bands now contract again in the 12-hour chart which typically indicates reduced market volatility and may signal an impending price movement.
XRP has recently experienced substantial selling pressure, raising concerns about a potential dip below the significant $2 mark.
However, analyst Steph has suggested that a rebound could be on the horizon, potentially driving the price up nearly fivefold.
The Current Market Situation
In a recent tweet on X, Steph pointed out that the Bollinger Bands for XRP on the 12-hour chart are beginning to tighten again.
This technical setup has historically preceded significant price movements, making it a key indicator for traders.
For instance, a notable example occurred just a few weeks ago, where XRP saw an explosive rally of 490%.
Understanding the Technical Setup
The Bollinger Bands indicator is a popular tool used to measure market volatility and establish key support and resistance levels.
A phenomenon known as a “squeeze” occurs when the bands contract, signaling reduced volatility.
This contraction often foreshadows a major price movement, either upward or downward.
For XRP, the last time the Bollinger Bands tightened on the 12-hour timeframe, it triggered a remarkable surge in price.
The token soared from approximately $0.49 in the first week of November to a peak of $2.90 by the first week of December.
Will History Repeat Itself?
Currently, XRP’s price hovers around $2.21, consolidating after a recent bullish rally.
Just yesterday, XRP dipped to lows of about $2.17, coming alarmingly close to breaking below the crucial $2 psychological barrier.
Despite this, the tightening Bollinger Bands suggest that traders are keenly anticipating the next significant price movement.
If history were to repeat itself, as some speculate, the breakout could mirror the previous 490% rally, potentially pushing XRP’s price to as high as $13.33.
However, while this scenario is enticing, many analysts, including Steph, are adopting a more cautious outlook for XRP in the short term.
Some believe that $13 might represent the peak for XRP in this market cycle.
In the immediate future, market analysts forecast a potential price rally to between $4 and $5 before a subsequent correction phase occurs.
Key Levels to Monitor
As XRP navigates this ongoing correction, analysts stress the importance of maintaining support around the $2 level to sustain a bullish trajectory.
Casi Trade outlines two possible scenarios: either a correction with support near the trendline or further bearish movement below it.
She emphasizes that holding within the $1.90 to $2.00 range is crucial for XRP’s recovery.
Market commentators, including Chad Steingraber and IncomeSharks, are also optimistic about a rebound.
Steingraber highlights the significance of a “double tap” at the $2 mark as a potential launch point for new highs.
So far, during the current market downturn, XRP has managed to stay above the critical $2 level.
Conversely, some traders are closely monitoring the resistance at $2.90, which, if breached, could pave the way for further gains.
While XRP faces selling pressure and potential dips, the tightening of Bollinger Bands suggests a possible forthcoming rally.
The market remains cautiously optimistic, with key levels to watch that could dictate the token’s future movements.
As always, traders should stay informed and prepared for the volatility that characterizes the cryptocurrency market.
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Also Read: XRP’S Drop Now Sparks Optimism
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