XRP Price Faces Bearish Divergence: Could a 25% Correction Be on the Horizon?

• XRP’s price faces critical technical challenges as bearish divergence signals a potential correction, drawing attention from traders and analysts alike.

• After hitting a multimonth low, XRP’s recent volatility has put its bullish momentum at risk, complicating its outlook amid fluctuating market conditions.

• A COINOTAG analysis highlights that XRP’s relative strength index (RSI) is signaling weakening buying pressure, suggesting further downside risk.

XRP’s price may face a 23% correction amid bearish signals on key charts, demanding attention from crypto traders and investors.

XRP Faces Bearish Divergence on Key Charts, Raising Alarm

XRP’s impressive surge over the past three months has captivated the crypto market, soaring from $0.50 to an all-time high of $3.40—a staggering 580% increase. However, the altcoin’s recent price action reveals concerning technical signals, particularly a bearish divergence developing on both the daily and weekly charts.

The fluctuations in liquidity have been exacerbated by external factors, including a recent flash crash tied to a non-crypto political event. This scenario suggests that buying interest might be waning, culminating in an erosion of bullish momentum for XRP.

As depicted in the charts, XRP has managed to establish higher highs in price, yet its relative strength index (RSI) has charted lower highs—a classic indication of diminishing buyer strength. Both the daily and weekly RSI trends are falling from overbought conditions, hinting at a potential market reversal.

Should these bearish divergences materialize, XRP faces the risk of retreating below the critical threshold of $2, implying a drop of approximately 23% from its current value, as new support levels develop at lower price points.

Analyzing XRP’s Current Market Position and Future Trends

It is essential to contextualize XRP’s current market position. Despite its prior highs, the altcoin has been met with increased volatility, often characteristic of the broader cryptocurrency landscape. According to recent data, XRP’s price retracement could be indicative of larger market trends, where fear of further corrections is palpable among traders.

The analysis from COINOTAG underscores that high-timeframe charts tend to dictate more significant market trends, and the divergence observed on both the daily and weekly frames could signal a shift towards a bear-favored environment. Such changes warrant careful monitoring, especially given the crypto market’s propensity for rapid fluctuations that can impact long-term positions.

Can XRP’s Bullish Trend Be Revived?

In the realm of technical analysis, understanding points of invalidation is crucial. XRP’s bearish divergence may be rendered irrelevant if it manages to uphold a price above $2.90. This threshold represents a pivotal level, acting as previous resistance and potential support during market re-tests.

The $2.90 level was notably observed during XRP’s rise in December and was integral in supporting the price as it moved past the crucial $3.40 all-time high. Increasing activity from major exchanges like Binance and Coinbase around this price level has historically supported bullish momentum.

A decisive recovery above $2.90 could reinstate a bullish sentiment, thereby lessening the bearish pressures evident in recent trends. Nevertheless, the crypto market remains unpredictable, and ongoing indecision could favor sellers, suggesting that traders should remain vigilant and prepared for potential market developments.

Conclusion

XRP continues to navigate a complex market filled with challenges and opportunities. With bearish divergences that could trigger significant corrections, traders need to remain cautious, especially as the price hovers around critical levels. Key support at $2 and resistance at $2.90 will be crucial in determining XRP’s next moves. As events unfold, maintaining a disciplined approach will be vital for achieving favorable outcomes in this dynamic landscape.