As XRP struggles to maintain a critical level, analysts are closely monitoring key indicators that could determine whether the recent pullback is a temporary setback or the beginning of a more significant correction.
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XRP Rally Faces Critical Resistance
XRP experienced a decline on Tuesday, dropping to $1.35, its lowest point since late April. The cryptocurrency has been trading between $1.36 and $1.50 for the past month, attempting to break out of this range multiple times.
Last week, XRP surged above the key resistance level on the CLARITY Act progress, reaching a two-month high of $1.54. However, the price was quickly rejected, leading to a 12% decline over the following days.
ChartNerd, a market observer, warned that XRP could face another price correction towards new lows, citing concerning signals such as a major resistance area and a death cross in the weekly Stoch RSI.
The analyst highlighted the importance of retesting the weekly 20 and 50 EMAs, which are crucial resistance levels that have not been revisited since January, when XRP experienced a significant drop.
Furthermore, the weekly Stoch RSI crossover has historically signaled a local top for XRP, with previous crosses leading to deeper corrections. The recent rally to $1.54 has prompted a retest of the weekly 20 EMA for the first time since January, with failure to break above this level potentially triggering a further downward trend.
‘Next Big Move’ Targets $1?
ChartNerd suggested that XRP must reclaim the EMAs to avoid a bearish scenario, but the timing may not be right yet. Even if the altcoin reaches $1.80, the analyst believes it will struggle to maintain that level long-term and could retrace towards lower levels.
A rejection from the EMAs could potentially push XRP towards a cycle bottom of $0.70, a previous level of resistance that has not been retested.
Analyst Ali Martinez pointed out that XRP is poised for a significant price move, citing a tight Bollinger Band squeeze on the three-day chart as a signal of an impending price expansion. Investors are advised to wait for a clear breakout from the current trading range to confirm the next major trend direction.
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A close above $1.50 could signal a move towards $1.80, while a breakdown below $1.29 could lead to a deeper correction towards the $1.00 support level.
Featured Image from Unsplash.com, Chart from TradingView.com