Analysis
For XRP, is an additional sell-off on the cards? What then?
Posted:
| Last updated: January 30th, 2024
It has been a month since the crypto crash but the market has shown no clear signs of recovery just yet. Majority of altcoins have traded below major resistance marks and the same was no different for XRP. Losses over the last 30 days accumulated to 30% as the digital asset struggled to break above its upper ceiling of $1.10.
In fact, its movement in June was even more labored as the cryptocurrency showed a steady decline back towards its 19 May swing low of $0.643.
At press time, the cryptocurrency held the seventh spot in CoinMarketCap’s crypto rankings and traded at $0.705, down by 12% over the last 24 hours.
XRP’s 12-hour chart
Source: XRP/USD, TradingView
XRP’s upper sloping trendline showed the formation of lower highs since its 19 May decline. The 20-SMA (red) flipped bearish and a retracement towards $0.643 support seemed inevitable at this point. However, was an additional sell-off on the cards? XRP’s defensive zone of $0.643 and $0.718 was expected to cushion incoming losses but there was a slim chance of a breakdown as well.
Reasoning
XRP’s Relative Strength Index has failed to move above 50 over the past month. At the time of writing, the index flashed oversold conditions and warranted a reversal over the coming days. Stochastic RSI highlighted a bullish crossover in the oversold region. These signs seemed to suggest that XRP would cut trim its losses within a demand zone of $0.761-0.643. However, selling pressure was still dominant on OBV’s downtrend as a bullish divergence was invalidated.
Visible Range showed little trading activity around XRP’s defensive line of $0.64 and this barrier could collapse in the face of sustained selling pressure. In fact, Visible Range showed higher interest for XRP between $0.55 and $0.61 which could be its next destination in case of a breakdown.
Conclusion
XRP’s mixed bag of indicators made it arduous to pinpoint its movement in the coming days. The defensive zone of $0.643 and $0.718 was projected to cushion further losses but a breakdown could not be discounted. An unfavorable outcome would see the cryptocurrency move to a stronger support region of $0.55 -$0.61.
