The readings from the XRP/USD chart show that the altcoin has been trending within a narrow range over the last three trading sessions. Since Friday, XRP has faced resistance at $3.30 and has found support at $3.22.
This follows a four-day rally between August 3 and August 7, during which the token increased by 20%. The current sideways trend indicates reduced market volatility, reflecting a relative balance between buying and selling pressure.
In such phases, the market is often in a 'wait and see' mode, with traders anticipating a catalyst to determine the next price movement.
The decrease in volatility is evident in the Average True Range (ATR) of XRP, which has fallen 10% since August 7. The ATR measures the degree of price fluctuation over a set period, and a declining ATR signals calmer market conditions with less volatility.
While periods of low volatility suggest market stability, they can also mean that traders are becoming less active, often a precursor to a sharp breakout in either direction.
Moreover, the Elder-Ray Index of XRP reinforces the case for a possible bearish breakout. This indicator measures the strength of buyers (bullish power) and sellers (bearish power) by comparing price movements against a moving average.
In the daily chart of XRP, the Elder-Ray Index has been showing green histogram bars, which represent bullish strength, that have been steadily decreasing in size over the past few days.
This contraction points to a loss of buying momentum and creates an opportunity for sellers to take control and push the price of the altcoin down.
Strong selling pressure could trigger a breakout below the support at $3.22. If this happens, the price of XRP could deepen its decline and reach $2.99.
However, XRP could surpass the price barrier at $3.33 if new demand resurfaces. A successful breakout could open the door for a rally towards $3.66.
