Ripple: What's next for XRP? Outline the effects of the previous bull run

Ripple: What's next for XRP? Outline the effects of the previous bull run

Disclaimer: The following analysis is the sole opinion of the writer and should not be considered investment advice.

XRP's southward trip was finally pulled back as buyers held the benchmark support at $0.3 as they lined up for a rally over the past few days. 

The SEC's recent Ripple demand update sparked a positive sentiment among buyers as XRP moved above its EMA band on the daily chart.

However, sellers may now re-enter the market to break the green candle chain in the coming sessions. At press time, XRP is trading at $0.4638, up over 0.0% over the past 24 hours.

XRP Daily Chart

Source: TradingView, XRP/USDT

While following a side path, XRP has been consolidating in the $0.3-$0.38 range for over three months. After an expected rally from the $0.30 basis, the coin saw a bullish engulfing candle, setting the stage for a patterned breakout.

This rally has seen over 60% growth in just one week. Therefore, the uptrend above the EMA bands has confirmed greater buying. But trendline resistance has sparked selling rallies over the past 11 months.

Therefore, the bears can aim to trigger a reversal towards the EMA bands. A drop below $0.447 could further increase the chances of this happening.

In this case, potential targets would be in the $0.409 area. An immediate bounce could retest the long-term trendline resistance before a move to commit the trend.

Basic reason

Source: TradingView, XRP/USDT

The Relative Strength Index (RSI) has entered the overbought zone and marked the expected reversal. A continued decline towards the midline could indicate that buying pressure is easing.

Furthermore, Chaikin Money Flow (CMF) has marked lower highs in the price action rally. Therefore, this line diverges down in price.

On the other hand, the MACD shows a strong bullish threshold. Investors should look for a possible bearish crossover to gauge the probability of a recession.

Conclusion

With XRP's reversal to the long-term resistance line and bearish divergence on the CMF, the coin could see a short-term decline.

But looking at the increasing buying pressure, the buyers are likely to hold the support along the EMA bands to resume the uptrend from a long-term perspective. In any case, the goals will remain the same as discussed.

Ultimately, tracking Bitcoin's movement and broader sentiment will be important to identify the chances of a bullish trend lapse.

 


Sep 27, 2022

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