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The market is being taken by surprise by XRP. Days after the asset's dramatic decline below the psychological $2.00 level raised fears of a more severe correction, it has made a remarkable recovery that may completely change the bullish narrative. On the daily chart, XRP has risen by almost 10% over the past day, solidly regaining the $2.10 mark and moving in the direction of the short-term resistance level cluster.
The 26-day EMA has been a crucial dynamic resistance since mid-May and the asset is currently flirting with it. If this moving average is confirmed to be broken above, a new short-term uptrend may begin, bringing $2.30 and possibly $2.50 into view in the days ahead. Only a couple of sessions ago, this type of bounce was not anticipated. With XRP making lower lows and repeatedly testing the 200-day moving average (black line), sentiment was on the verge of a meltdown.
Strong volume support during the recovery, however, along with momentum returning to the RSI - which is currently rising at 49 - suggests that bulls were not only present but actively purchasing the dip. The invalidation of the descending wedge pattern in which XRP had been trapped for weeks is the most significant technical change at this point. A previously bearish formation has now turned into a bullish one as the price has broken out of that wedge to the upside.
A more significant rally will be set in motion if this move holds. The 50 EMA at $2.23 is the next obvious target if XRP keeps up its momentum and closes decisively above the 26 EMA. The next obstacle is $2.50, and if general market conditions hold, a trip to $3 is not out of the question.
The bounce has caused a complete overhaul. This recovery could develop into a full-fledged breakout pushing XRP toward a retest of this year's highs, provided bulls maintain control and the cryptocurrency maintains above important moving averages.
U.Today Editorial Team
Vladislav Sopov