XRP sign has continued to enhance after falling by extra than 70% in a correction between April 2021 and January 2022.
Why the XRP/USD 50-week EMA is key
On Feb. 13, XRP/USD reached as high as $0.916, above its 50-week exponential inviting lifelike (50-week EMA; the red wave) spherical $0.833. The upside cross, albeit now not decisive, opened potentialities for added bullish momentum, primarily owing to a historic procuring sentiment all over the acknowledged wave.
For instance, merchants had successfully reclaimed the 50-week EMA as enhance in the week ending July 27, 2020, extra than a year after flipping the wave as resistance. Later, XRP’s sign rallied by extra than 820% to $1.98 in April 2021, its top stage in extra than three years.
Conversely, valid via the bearish cycles between 2018 and 2020, XRP’s 50-week EMA acted as a solid resistance stage on extra than one times. That confirmed the wave’s capacity to withstand bullish recovery sentiments, equivalent to the one witnessed valid via the original sign rebound.
Can XRP retake $1?
XRP now desires to expend decisively above its 50-week EMA, which can perhaps perhaps accept as true with it reclaim $1 in the classes forward.
The stage, which sits spherical 25% above the original sign ranges, coincides with XRP’s two key resistance targets. The first is the multi-month downward sloping trendline that has been capping the token’s upside bias since April 2021
In the meantime, the 2d target is the 0.382 Fib line of the Fibonacci retracement stage drawn between $2.70-swing high and $0.10-swing low, also having a historic past of limiting XRP’s solid trends by acting as both enhance and resistance.
Composed a decrease high, the $1-stage would now not promise to pick out XRP out of its correction bias. As yet one more, it will also elevate opportunities for merchants to proper their meantime earnings, thus exposing XRP to a pullback toward an imminent enhance target near $0.71, as per the Fibonacci retracement graph.
The bears’ case
Conversely, failure to carry out a decisive shut above the 50-week EMA resistance may perhaps well perhaps accept as true with XRP gaze a pullback toward its 200-week EMA (the blue wave) near $0.54.
This cross dangers trapping the price inner a unfold defined by 50-week EMA as resistance and 200-week EMA as enhance, that will perhaps perhaps also discontinuance up in a extra breakout to the downside. The bearish outlook seems out of a fractal from June 2018-June 2019 session, as shown in the chart under.
Notably, XRP’s urge-as a lot as its document high of $3.55 in January 2018 coincided with its weekly relative strength index (RSI), forming a decrease high, thus confirming a bearish divergence.
Later, the price declined under its 50-week EMA but picked enhance from its 200-week EMA. The RSI’s fall also exhausted near 37, true above its oversold reading of 30.
XRP trended sideways inner the acknowledged inviting lifelike vary, while the RSI maintained a reading above 37. Then as soon as more, in June 2019, the price broke under the 200-day EMA enhance, extending its decline to as miniature as $0.10 as of March 2020.
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If the fractal plays out because it did in 2018-2019, XRP would possibility breaking under its 200-week EMA enhance near $0.54 in the approaching classes. This form of cross may perhaps well perhaps also shift XRP’s meantime downside target to the 0.786 Fib line near $0.43, in accordance to the Fibonacci retracement graph painted from $0.14-swing low to $1.52-swing high.
In the meantime, a extra spoil under $0.43 would save the following downside target at $0.22, a stage with a historic past of high-quantity trading exercise.
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