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Key Insights
What is the significance of the $2.7 level on the price chart?
Analysis indicates that $2.7 has been a crucial support level since August. The accumulation of short liquidation levels suggests a possible retest before a downward move.
What would encourage swing traders to be more bullish?
If the $2.8 level is reclaimed as a demand zone, it would signal to traders that buyers are strong enough to push for a recovery above $3.
At the time of writing, Ripple [XRP] was trading at $2.42 and showing short-term bearish momentum. Sellers were dominant, potentially driving the price towards the $2 support level.
Technical Analysis Points to a 22% Price Decline for XRP
On the weekly timeframe, key swing points were identified at $0.486 and $3.4.
The rally from $1.61 to $3.66 starting in April established a bullish weekly structure, shaping the long-term outlook for XRP. A drop below $1.6 would be necessary to shift the swing structure to bearish.
Source: XRP/USDT on TradingView
The daily chart exhibited a bearish structure, with local highs and lows marked at $3.1 and $2.7. While the swing structure remained bullish due to the June and July rally from $1.9 to $3.66, the current bias leaned towards bearish. The breakdown below the $2.7-$2.8 demand zone indicated a shift in sentiment.
Furthermore, the Moving Averages and Awesome Oscillator confirmed the bearish outlook, although the Chaikin Money Flow (CMF) showed some buying pressure. Nevertheless, this buying pressure was likely insufficient to push XRP above $2.8.
With the current bearish structure, a price decline towards $1.9 and $1.6 was anticipated. A daily close below $2.28 would increase the likelihood of a 22% price drop.
How do liquidation levels impact XRP’s price?
The concentration of short liquidation levels around $2.67, as shown on the liquidation heatmap, indicated a strong magnetic effect that could pull XRP towards $2.7 in the near future.
Given the bearish internal structure and the supply zone around $2.7, any potential bounce could lead to a renewed downward movement. However, external factors like Bitcoin’s price action could also influence XRP’s trajectory.
If Bitcoin surpasses $117k in a rally, it would signal bullish strength and potentially pave the way for XRP to recover above $3.1.
Disclaimer: The information provided is the author’s opinion and does not constitute financial advice.
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