Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
After a massive decline of 38% on 1 February, XRP has been able to pull itself back on the charts, with the crypto surging above $0.50 from a floor price of $0.34. Although the crypto-asset has lost its 4th position on the rankings to Cardano, its market cap was still well above $20 billion, at press time.
XRP 12-hour chart
Source: XRP/USD on TradingView
Since the turn of 2021, XRP has slowly built its position on the charts, undergoing movement within the trendlines of an ascending channel. While a massive breakout did take place towards the end of January, the crypto’s valuation quickly fell below the pattern once again. At the time of writing, XRP was trading above the average line in the channel, positioning itself right under the resistance level of $0.51.
While a long-term support level was available at $0.34, an immediate re-test could take place from $0.45. As can be observed from the attached chart, the 20-day Moving Average seemed to be supporting the price’s northbound movement, but the possibility of another correction was strong.
A strong move towards the $0.60-$0-64 range may manifest if the bullish momentum is carried forward. However, indicators highlighted more signs of a bearish takeover in the long run.
Market Rationale
Source: XRP/USD on TradingView
According to market indicators, the MACD, at press time, was exhibiting a bearish divergence with the price movement. The bullish momentum was stagnating at the top and the Relative Strength Index or RSI pointed to a reversal in buying pressure.
While the price can be moved into the overbought region, the Stochastic RSI suggested that a bearish reversal may have already taken place.
Overall, the bearish signals seemed more defined, making it more likely that the crypto-asset will drop over the new few weeks.
Verdict
By the end of February, XRP may drop below $0.45 or at least re-test from that range before attaining a high at $0.60-$0.64. The resistance level at $0.51 remains fundamental in terms of market structure, and will be critical in determining the market direction over the next few days.
