After plummeting by more than 70% in a correction between April 2021 and January 2022, the price of XRP has continued to recover.
On February 13, XRP/USD climbed to $0.916, well above its 50-week exponential moving average (50-week EMA; the red wave) of $0.833. The upside rise, while not decisive, opened the door for more bullish momentum, according to previous purchasing sentiment around the wave in question.
Traders, for example, successfully regained the 50-week EMA as support in the week ending July 27, 2020, more than a year after it had been flipped as resistance. In April 2021, the price of XRP soared by more than 820 percent to $1.98, its highest level in more than three years.
XRP’s 50-week EMA, on the other hand, served as a significant resistance barrier on several times throughout the bearish cycles between 2018 and 2020. That demonstrated the wave’s ability to endure strong recovery feelings like those seen during the current market bounce.
XRP must now maintain a firm hold above its 50-week EMA, or it may retake $1 in the next sessions. The level, which is about 25% higher than current prices, corresponds to XRP’s two major resistance levels. The first is a multi-month downward sloping trendline that has capped the token’s upward inclination since April 2021.
Meanwhile, the 0.382 Fib line of the Fibonacci retracement level drawn between the swing high of $2.70 and the swing low of $0.10 has a history of acting as both support and resistance for XRP’s strong movements.
The $1-level, while still a lower high, does not appear to be able to break XRP’s correction bias. Instead, it may provide opportunities for traders to lock in their short-term profits, potentially exposing XRP to a reversal toward an impending support target of $0.71, as shown by the Fibonacci retracement graph.
Failure to close decisively above the 50-week EMA resistance, on the other hand, might lead to a fall to the 200-week EMA (the blue wave) near $0.54.
This move risks keeping the price inside a range defined by the 50-week EMA as resistance and the 200-week EMA as support, potentially leading to another negative breakout. As illustrated in the figure below, the bearish view emerges from a fractal from the June 2018-June 2019 session.
XRP’s ascent to a record high of $3.55 in January 2018 corresponded with its weekly relative strength index (RSI) hitting a lower high, confirming a bearish divergence.
Later, the price fell below the 50-week EMA, but the 200-week EMA provided support. The RSI fell to a low of 37, barely over the oversold level of 30.
While the RSI remained above 37, XRP trended horizontally within the aforementioned moving average range. Despite this, the price fell below the 200-day EMA support in June 2019, extending the slide to as low as $0.10 in March 2020.
If the fractal plays out the same way it did in 2018-2019, XRP might fall below its 200-week EMA support near $0.54 in the next days. According to the Fibonacci retracement graph painted from $0.14-swing low to $1.52-swing high, such a move might shift XRP’s interim downside target to the 0.786 Fib line near $0.43.