Market wipeout drags XRP lower: Here’s why a bounce to $2.2 is important

XRP witnessed a continued decline in exchange reserves, signaling accumulation onchain. A recent report also highlighted how the bias remained bearish.

Since then, XRP has slumped back toward the $2 level, unable to clamber back over the $2.28 resistance.

The total crypto market cap has fallen by $141 billion within two days. CoinMarketCap showed that the Fear and Greed Index was at 20, on the threshold of extreme fear.

This fear will impact altcoins and their attempts at recovery in the coming weeks.

Price pattern analysis

Source: XRP/USDT on TradingView

When the price pushed past $2.2 last week, it was noted that a bounce to $2.58 before a bearish reversal was possible.

The fact that XRP bulls could barely push beyond $2.2 and keep prices there revealed the strength of the sellers.

The recent downturn, though it came amidst a market-wide wipeout, was a signal of seller dominance. To the south, the $1.9 and $1.61 were important long-term support levels.

Source: XRP/USDT on TradingView

The 1-hour chart had a large imbalance overhead from $2.09 to $2.18. Although not strictly a fair value gap, it still represented a sizeable supply zone overhead.

Any price bounce toward $2.2 would offer an opportunity to go short.

A move beyond $2.21 is needed to flip the short-term bias bullishly. Just as importantly, market sentiment needs to stabilize, and XRP must see heightened demand.

Indicator-based review

The daily and 1-hour charts’ indicators showed strong selling pressure and bearish momentum. The 20 and 50-period moving averages have served as resistance to XRP prices.

Any short-term bounce toward $2.15 is likely to face another rejection and slump toward, and below, $2.

Source: CoinGlass

The liquidation map reinforced what the 1-hour chart suggested. The cluster of high-leverage short positions from $2.06-$2.15 was a liquidity target in the short term.

XRP would likely bounce higher to sweep this liquidity before continuing its current downtrend.

Price hotspots to watch

The $1.9 and $1.61 levels are key supports from the long-term XRP price action. In the short term, the $2.09-$2.18 resistance zone is likely to reject XRP bulls in the event of a price bounce.

Final Thoughts

• The multi-month downtrend for XRP continued as the altcoin made a new lower low on the daily timeframe, and threatened to fall below $2 once again.
• Lower timeframe traders can watch out for a minor price bounce toward $2.2, which would likely offer a selling opportunity. 

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion