XRP, the fourth-largest cryptocurrency by market cap, recently dipped below the crucial $2.00 support level, reflecting a broader correction in the crypto market. The coin has shed over 9% in value, raising concerns among investors. However, historical price action suggests strong support zones, hinting at a potential rebound.
The U.S. Securities and Exchange Commission (SEC) initiated a lawsuit against Ripple in December 2020, alleging that XRP was sold as an unregistered security. However, in 2023, Judge Analisa Torres ruled that XRP itself is not a security, weakening the SEC’s position.
Recent SEC meetings have discussed legal matters and settlements, leading many to speculate that a resolution could be near. Pro-XRP lawyer Bill Morgan believes Ripple has the upper hand, while former SEC lawyer Marc Fagel remains skeptical. A positive outcome for SEC could trigger a significant XRP price rally.
XRP’s on-chain activity has plummeted by 50%, dropping from 202,250 active addresses in December to just 101,169 today.
Despite this decline, the TD Sequential Indicator is flashing a buy signal on the hourly chart, hinting at a possible relief rally.
XRP Shows Strong Resilience
XRP has demonstrated significant strength in holding its key support level, with price dipping into the Blue Zone support multiple times (4-5 instances). Each time, buyers have aggressively defended this zone, highlighting a strong accumulation phase and a bullish sentiment.
Market makers employ a systematic approach to exhaust bullish momentum by repeatedly testing a strong support level until it weakens. A similar strategy applies to resistance levels, where repeated tests gradually erode bearish defenses. These strategic moves set the stage for a potential breakout or breakdown, depending on exhaustion levels.
From a macro-level viewpoint, $2 – $3.4 is considered “market noise.” Within this range, traders exercise flexibility in their strategies, with movements within this band not necessarily indicative of long-term trends. Key attention should be given to price action outside this range for a clearer trend signal.
Key Factor: Exhaustion at Critical Levels
XRP is repeatedly testing the Blue Box support, indicating signs of buyer exhaustion. Simultaneously, resistance at $3.4 remains robust, limiting bullish momentum. This confluence suggests an impending decisive move in either direction, necessitating close monitoring of price action.
Technical theory suggests that the more times a support or resistance level is tested, the higher the likelihood of an eventual breakout or breakdown. While a breakdown scenario is not being explicitly predicted, accumulation during dips remains a favorable strategy for long-term investors.
Bearish Signals to Watch
21 EMA Bearish Cross with the 100 MA – A crossover of the 21 Exponential Moving Average (EMA) below the 100 Moving Average (MA) may introduce downward pressure on XRP. Although moving averages are lagging indicators, they provide valuable confirmation of increasing selling pressure.
Bullish Breakout Levels to Watch
A successful daily close above the following key resistance levels strengthens the bullish outlook:
$2.20 – Initial resistance level.
$2.30 – Confirmation of bullish momentum.
$2.60 – Strengthening of upward trajectory.
$2.83 – Strong resistance; breakout indicates momentum shift.
$3.10 – Final hurdle before major breakout.
$3.4 and above – A sustained breakout and hold above this level would signal a significant bullish shift, paving the way for further price appreciation.
XRP is undergoing a retracement phase, testing crucial Fibonacci support levels before a potential reversal. The price action indicates that XRP is approaching a strong support zone, which could determine the next major move.
Support Zone: $1.2578 (Critical area for a potential rebound)
First Target: $3.0110 (Initial resistance level in case of breakout)
Final Target: $4.2243 (Major resistance and potential bull target)
Retracement Level: XRP is currently testing the 0.786 Fibonacci retracement level, a historically strong buy zone for trend reversals.
Potential Long Entry: If XRP holds above $1.2578, it presents a high-probability long setup with a favorable risk-reward ratio.
Confirmation: A strong bounce from this support zone would confirm a bullish reversal, signaling a possible breakout rally toward $3+ and beyond.
After a massive 500% rally from November to mid-January, XRP has entered a consolidation phase within the $2 to $2.5 range. The recent 24.20% weekly decline and a 34.34% drop over the past month indicate strong selling pressure. However, XRP remains in a bullish structure as long as the $2 support holds.
Technical indicators suggest a potential rebound, with the RSI near its lower threshold and the Accumulation/Distribution indicator showing continued accumulation. If buyers defend $2, XRP could attempt another breakout toward $3.3. However, a breakdown below this level may lead to a drop toward $1.6.
Source: TradingView
While short-term volatility persists, XRP’s long-term outlook remains positive. If Ripple secures a favorable outcome in the SEC case and bullish technical patterns play out, XRP could reclaim its $3.40+ highs. Traders should monitor key support levels, resistance breakouts, and legal developments to anticipate the next major move.
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Lokesh Gupta is a seasoned financial expert with 23 years of experience in Forex, Comex, NSE, MCX, NCDEX, and cryptocurrency markets. Investors have trusted his technical analysis skills so they may negotiate market swings and make wise investment selections. Lokesh merges his deep understanding of the market with his enthusiasm for teaching in his role as Content & Research Lead, producing informative pieces that give investors a leg up. In both conventional and cryptocurrency markets, he is a reliable adviser because of his strategic direction and ability to examine intricate market movements. Dedicated to study, market analysis, and investor education, Lokesh keeps abreast of the always-changing financial scene. His accurate and well-researched observations provide traders and investors with the tools they need to thrive in ever-changing market conditions.
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