After losing support above the 50 and 100 EMA levels, XRP took a serious hit, falling more than two points and now trading at about $2.12. At first glance, this pullback might appear to be a bearish signal, but the bigger picture indicates that XRP may be preparing for a much more robust rebound. Today the asset has landed squarely on its 200-day moving average, which has historically served as dynamic support for a number of significant tokens.
Statistically speaking, a bounce from this point is not only possible but also typical, particularly when selling momentum is accompanied by higher volume and RSI indicators move into oversold territory. There is still plenty of opportunity for a reversal as XRP’s RSI is currently just above 45.
In terms of structure, XRP has been forming a long-term descending triangle for the past few months, and it appears to be coming to an end. Even though this decline is steep, it seems to be a retest of the 200 EMA, as well as the larger pattern’s lower support trendline. A breakout move toward the $2.45-$2.60 range could result from a successful hold at this level, which would complete the last leg of consolidation.
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It is important for investors to keep in mind that this could be a bear trap, a fakeout move intended to shake out weaker hands before the price reverses. The short-term recovery of the $2.20 zone by XRP could indicate a resurgence of buying interest and the beginning of an upward trend. Currently, the key levels to keep an eye on are resistance at $2.26 and $2.45 and support at $2.09.Â
Breaching either will provide a clear indication of direction, but if the macro sentiment does not worsen further, the current setup favors a bounce. To sum up, the recent decline in XRP may cause anxiety, but it may also act as a catalyst. When psychological and technical support levels come together, XRP is in a critical recovery zone. The bullish reversal thesis should be confirmed by volume confirmation and daily closes above $2.
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