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The price of popular cryptocurrency, XRP, eyes a major test in recent hours. After falling by 6.2% this Monday, two days ago, the price of XRP found a bottom at the 20-day moving average, which also serves as the median in Bollinger Bands indicator.
Bollinger Bands consist of three lines: the upper, middle (median) and lower bands. The median is typically a 20-day moving average, while the upper and lower bands are two standard deviations away from this average. Prices oscillating within these bands can indicate a range-bound market, while breaches of these levels often signal upcoming trends.
After testing these levels many times since then on smaller time frames, the price of XRP closed the next day above it and, as in textbooks of technical analysis, soared by 4.51%.
The rebound, however, faced a setback when news broke that the U.S. Department of Justice (DoJ) received approval to sell seized Bitcoin from the infamous Silk Road. The announcement sparked a marketwide sell-off, dragging XRP’s price down again.
Fortunately, it did not breach a recently conquered median Bollinger Band on the daily chart. Holding this support level has maintained a bullish bias for XRP. But, another retest of the median line is possible, which would mean a further 1.48% decline from current levels.
If this retest is successful, the path toward the upper Bollinger Band at $2.51 becomes more plausible, offering potential for significant gains. Conversely, a breach of the median line could shift the focus to the lower Bollinger Band, around $2, where buyer interest would likely be tested.