A cryptocurrency analyst has highlighted how the Bollinger Bands are putting pressure on the daily XRP price, a potential sign that volatility could be coming.
XRP Bollinger Bands have tightened recently
In a new one after on X, analyst Ali Martinez discussed the latest trend in the Bollinger Bands for XRP. The “Bollinger Bands” refer to a technical analysis (TA) tool that provides a measure of the volatility of an asset.
The indicator includes three bands: a center line of the 20-day moving average (MA) and two standard deviations above and below this level. When the bands show a large gap, it means that the price is behaving volatilely. Likewise, the contraction of stocks to a narrow width indicates stability in the market.
Here is the chart shared by Martinez showing the trend in the XRP Bollinger Bands on the daily time frame over the past few weeks:
As shown in the chart above, the XRP Bollinger Bands were a notable distance apart in the first half of February, but they have since shown a contraction. This trend has developed as the price of the asset has consolidated.
Today, the band is relatively tight around the cryptocurrency’s value, implying that volatility has fallen. The analyst has noted that this indicates that the coin could see a volatile spike soon. Historically, digital assets have often tended to follow periods of stagnant price action with chaotic moves, so it wouldn’t be unprecedented for XRP to observe volatility from here.
The Bollinger Bands are not only a measure of volatility, but are sometimes used to assess whether an asset is over or under bought. The price increase to the upper band can be taken as a sign that the price is becoming too expensive, while a price drop to the lower band can lead to a bottom.
The chart shows that XRP bottomed in February after breaking below the lower level. Currently, the coin is trading right around the middle band, so from the indicator’s perspective, it is in a neutral spot.
Therefore, if this results in a volatile movement due to the contraction of the bands, it may be equally likely to occur in either direction, at least in theory. It now remains to be seen whether the current phase of low volatility will be followed by sharp price action or whether the market will remain stale for a while longer.
XRP price
At the time of writing, XRP is hovering around $1.39, down 0.3% over the past seven days.