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As the asset gets closer to a potentially crucial reversal point, XRP's recent rally has shown signs of exhaustion. There are legitimate worries about a short-term U-turn in price action because the four-hour and daily charts both indicate that momentum is rapidly ebbing. The market became excited when XRP saw a dramatic spike above the descending trendline on the four-hour chart.
But now there is a distinct rounded top in the rally, and both price and volume have dropped significantly. A test of structural support appears imminent, as indicated by the move down toward the confluence of the short- and medium-term EMAs and the rejection at the local peak, which signals waning buying pressure. It may retest the breakout trendline or even drop back to $2.10 if XRP is unable to maintain the ~$2.30-$2.26 zone.
On the other hand, the daily chart is still at least structurally bullish. The descending wedge pattern's breakout is still present and the price is still above the 100 and 200 EMAs. The notion that XRP's broader uptrend is still active is supported by this macro perspective. However, it is important to pay attention to the price-RSI bearish divergence.
This suggests a lack of confidence among bulls to maintain upward momentum, as does the volume tapering off following the initial breakout. It is unclear if this pullback is the start of a more significant reversal or merely a healthy correction. The latter could be the response if the daily close drops below the $2.26 mark with significant selling volume. In summary, XRP finds itself at a technical juncture. Here a rebound might restore momentum and sustain the breakout story.
However, the recent gains could be undone and XRP could return to consolidation territory if the current structure is not maintained, potentially invalidating the bullish wedge breakout. To predict the next move, monitor the volume and the price's relationship to the important support band.
Vladislav Sopov
Dan Burgin