XRP Buy Signal: Rally May Target Divergence

What to Know:

• XRP is consolidating near $1.87, with traders watching for a breakout or breakdown.
• Technical indicators suggest building pressure, with potential bullish divergences forming.
• A decisive move could impact short-term direction and liquidity.

XRP is trading in a tight range near key support levels, with price compression and steady volume signaling a potential breakout. The asset is currently holding near $1.87, and traders are closely monitoring this level for indications of short-term directional movement. The current market structure suggests a period of tension, which often precedes a significant price shift.

Market Structure Points to Tension

XRP’s recent price action aligns with a pattern of an initial rally followed by a prolonged consolidation and gradual downtrend. After a strong rally in July, the price action has been largely sideways through October, followed by a steady decline. Since November, XRP has been drifting lower without significant momentum, suggesting pressure is building.

A breakout above resistance levels around $2 to $3 could signal renewed bullish momentum, while a breakdown below the current support may push the price toward $1.5. The tightening range and consistent volume highlight this area as critical for determining future direction.

Additionally, a bullish divergence is forming, with the Relative Strength Index (RSI) showing higher lows even as the price forms lower lows. This divergence may indicate that selling pressure is waning, though the price has yet to reflect this potential shift.

Technical Zones for Traders

The $2 level is considered a significant resistance point. A sustained close above this level could pave the way for further gains toward $2.75. Intraday charts show XRP trading in a narrow range, with a retest of the $1.82 level potentially creating upside momentum if accompanied by a bullish reversal.

Conversely, a retest of the $1.98 resistance, followed by a rejection, could present a short trade opportunity. Traders are closely watching these levels to gauge potential entry and exit points.

Supply Dynamics

The amount of XRP held on exchanges has decreased to 1.6 billion tokens, marking a seven-year low. This decline from 3.76 billion tokens in October may reflect reduced selling interest or a shift toward longer-term storage among holders. The reduced supply on exchanges could potentially support price appreciation if demand increases.

Broader Market Context

The consolidation in XRP’s price occurs amid broader market discussions about potential regulatory developments and the introduction of crypto ETFs. While Bitcoin has seen significant inflows into its ETFs, the impact on altcoins like XRP remains to be seen. Any positive regulatory clarity or the introduction of new investment vehicles could improve overall market sentiment and liquidity, potentially benefiting XRP.

The current market structure suggests that XRP is at a critical juncture. Traders are advised to monitor key support and resistance levels closely, as a decisive move could set the tone for the coming weeks. The interplay between technical indicators and market sentiment will likely drive XRP’s next directional move.

Related: XRP Targets $2: Two Scenarios

Source: Original article