As a seasoned crypto investor with a knack for spotting trends and patterns, I find myself both intrigued and cautiously optimistic about XRP‘s recent performance. The meteoric rise of nearly 180% in a month is nothing short of impressive, but the overbought RSI levels and potential Fibonacci retracement extensions have my risk-management sensors tingling.
4 days following its multi-year peak at approximately $1.63, XRP (XRP) has experienced a decline of over 17%, currently trading around $1.41 as of November 27th. Despite this recent drop, it’s important to note that on a monthly basis, the cryptocurrency continues to capitalize on its “Trump Trade” gains, recording nearly a 180% increase in value – its best performance since April 2021.
Overbought XRP signals 25% dump by December
On a day-to-day basis, the Relative Strength Index (RSI) for XRP has consistently remained above 70 during November, suggesting that its current upward trend might be nearing exhaustion due to possible overbought conditions.
The analysis of past figures shows that XRP often experiences steep declines once it reaches excessively high Relative Strength Index (RSI) values. For example, in June 2023, the daily RSI for XRP exceeded 85 during a surge to $0.82. Following this peak, the price fell by approximately 46.5% within about two months, reaching a low of $0.43.
In a similar manner, after an RSI surge beyond 70 in November 2023, the value of XRP dropped by approximately 33.6%, going down from $0.65 to $0.43 over the subsequent weeks.
At present, the prices are in line with Fibonacci retracement extensions, meaning they follow a pattern based on the Fibonacci sequence. The latest surge of XRP has overshot the 2.618 Fibonacci extension at approximately $1.09, making it a significant barrier for further growth. This could potentially lead to XRP falling back towards the $1 mark, which represents the 1.618 Fibonacci extension, by December.
If an adjustment takes place, the $1 psychological level might temporarily halt further drops. Nevertheless, a more substantial decline could lead us back to the area around $0.85 that aligns with past Fibonacci support levels and the 50-day exponential moving average.
It’s worth noting that the decrease in XRP’s value seems to align with a modest reduction in the holdings of its wealthiest investors, specifically those who possess more than 100,000 tokens.
A decrease in whale ownership might signal a transition from a buying (accumulation) stage to a selling (distribution) phase. Whales typically amass tokens during periods of stability or low market activity. Once prices surge, these whales often disperse their assets to retail buyers who are eagerly following the market rise.
XRP long-term metrics hint at bullish momentum
Looking at the weekly price chart, it appears that XRP has moved into an extended uptrend phase following its breakout from a large symmetrical triangle formation.
Remarkably, Ripple (XRP) exited its triangle formation for the first time in seven years at the end of October. This technical action bears a striking resemblance to the breakout that occurred before XRP experienced its massive 43,650% surge from 2017 to 2018.
The ongoing surge in XRP is showing patterns akin to fractals, as it regains significant levels at the 0.5 Fibonacci retracement point (approximately $1.78), and now aiming for further gains.
Should the fractal pattern persist, there’s a possibility that XRP might aim to revisit its 2018 high around $3.41. Over the long term, it may even reach an estimated level of $13.93.
Fundamentals support a prolonged bull run.
For example, if Donald Trump gets reelected, it might help resolve the ongoing SEC vs Ripple dispute. Moreover, Ripple’s recent collaboration with UK-regulated digital asset exchange Archax to create a tokenized money market fund on the XRP Ledger could potentially increase XRP’s popularity even more.
In simpler terms, the Relative Strength Index (RSI) over a six-week period has risen to 70, which is usually followed by short-term corrections or periods of consolidation. It’s possible that there could be a dip to retest the upper trendline, currently around $1.00. This $1 target is consistent with the analysis on the daily chart shown earlier.
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2024-11-27 19:31