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XRP price rose from $0.42 to $0.53 between April 13 and April 20. As XRP faces a looming sell-wall at the $0.55 level, do the bulls have enough in the tank to drive the rally further in the days ahead?
XRP Trading Volume in Decline Despite 8% Price Rally
XRP price opened trading on April 20 at $0.52, the highest for the week, marking a 25% recovery after the global market crash on April 11 had sent prices spiraling to an 11-month low of $0.42.
This remarkable XRP price recovery over the past week came amid bullish tailwinds from investors seeking to front-run the potential upside from the just-concluded Bitcoin (BTC) halving event.
But interestingly, crucial market data trends suggest the upward trend has not been accompanied by an equal increase in market liquidity, contributing to fears of an imminent bearish reversal.
The Santiment chart below tracks the volume of XRP coins traded daily between April 12 and April 20, expressed in USD terms.
As illustrated above, XRP investors traded $1.48 billion on April 12, 2024. But since then, the trading volume has been in decline, with just $698.4 million worth of XRP traded on April 19.
In clear terms, this implies that despite XRP prices surging 25%, the level of trading activity remains in decline, dropping by a whopping $782 million over the past week.
Typically, falling trade volume during a period of rising prices suggests a lack of conviction or enthusiasm among market participants. As things stand, XRP traders appear hesitant to commit to large-volume positions.
If it persists, this rare market signal could eventually lead to a bearish reversal as the current bullish price action lacks sufficient momentum to break above key resistance levels.
XRP Price Forecast: Imminent Reversal Towards $0.50
Despite the 25% XRP price surge, XRP trading volume has declined by $780 million within the weekly timeframe. Drawing insights from this critical market signal, XRP price looks set for an imminent reversal towards the $0.50 territory.
The Bollinger band indicator further supports this stance. It shows that after reclaiming $0.52, the bulls now face a looming sell-wall at the $0.55 territory.
With the current market liquidity significantly lower than the volumes traded when XRP last fell below $0.55, prices could struggle to maintain upward momentum and reclaim that territory.
However, in the event of a major downtrend, the lower-limit Bollinger band indicates a key support level at $0.45. The presence of a substantial buy-wall at this level suggests that bears may encounter strong hindrances to further downside movement.