Following XRP's recent breakout above a crucial descending trendline, traders were expecting a big rally. However, the asset's price is reversing back toward $2.40, suggesting that it is losing steam rather than gaining it. Let's investigate the causes of this sudden slowdown and its potential implications for the market.
Even though XRP was able to break through the downward trendline, the rally was unable to maintain its upward momentum. This suggests that after the breakout, there was not much buying pressure, which is essential for sustaining a rally. XRP is now more susceptible to selling pressure because it has been unable to close firmly above $2.50, which has undermined bullish confidence.
XRP/USDT Chart by TradingView
There is a derisking phase going on on the larger cryptocurrency market as traders lock in gains from recent rallies. This pattern is especially apparent on assets like XRP that have already produced sizable gains. By restricting capital inflow into XRP, the decreased appetite for risk is further impeding the price growth of the cryptocurrency.
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Near $2.60, XRP encounters a sizable overhead resistance that has impeded its upward trajectory. The combination of this resistance and the drop in volume indicates that traders are reluctant to raise the price in the absence of more potent catalysts. A crucial support area to keep an eye on on the downside is the $2.30 level, which corresponds to the 50 EMA.
If XRP breaks through this barrier, it may retest lower supports at $1.20 or even $1.69. At the moment, the RSI is neutral at about 57, indicating that the market is unsure. XRP could lose more ground if selling pressure persists, especially if the market is still cautious overall. A robust recovery from the $2.30 support level, however, might rekindle optimism and present a chance for another breakout attempt.
The performance of XRP for the time being will be mostly determined by the state of the market as a whole and the asset's capacity to draw in new buyers. Traders can predict the next move by keeping a close eye on important support and resistance levels.
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