Analysis
XRP: Why bulls need to bring their A-game before this support level is breached
Posted:
| Last updated: January 30th, 2024
Since touching a local high of $1.4 during the first week on September, XRP has been buried under a pile of selling pressure. Heightened by Bitcoin’s retracement from $48K and a bearish symmetrical triangle, losses amounted to over 40% in the last two weeks.
Adding to this dire situation, a resulting bearish pattern threatened another sell-off moving forward. At the time of writing, XRP traded at $0.92, down by 1.26% over the last 24 hours.
XRP Daily Chart
Source: XRP/USD, TradingView
XRP’s woes were heightened after a symmetrical triangle played out as a continuation of a previous downtrend. The resulting breakdown saw XRP forfeit the $1-mark, an area that had been maintained since early-August. Now that an important support line had been breached, XRP was open to drawdowns towards $0.85 and $0.77. The last defensive resort rested at $0.65, from where the market would under risk of excessive bleeding.
An broadening wedge pattern also lined up favorably for bears. The setup presented chances of some more near-term losses before a reversal can be expected. However, an early breakout above $0.95 would alleviate many uncertainties.
Reasoning
The Relative Strength Index has held a bearish position since the wider market sell-off on 7 September. In such situations, the market remains weak and tends to attract more sellers than buyers. The Directional Movement Index shed some more light on the dynamics by picturing a bearish crossover a few days ago. Since then the market has seen more downwards pressure as opposed to upwards pressure. While the MACD was in agreement with such readings, a double bottom presented some hope in terms of a recovery.
Conclusion
XRP needed to stem its current losses before any talks of a bullish resurgence. Support lines of $0.85 and $0.77 would take center stage as sellers ease control over the next few days. However, traders must be cautious of a close below $0.65 and should forego any long setups from that point.
