Bearish Signal Could Throw Wrench in the Works for XRP Bulls

XRP is showing a potential exhaustion signal after kicking off the new year with a rather impressive 15% rally. 

The asset’s 1-hour chart prints a bearish divergence on the Relative Strength Index (RSI).

The bearish signal means that the cryptocurrency’s upward price action might not be supported by a corresponding increase in momentum. 

This is a classic technical warning sign that shows that a potential price pullback could be in the offing. 

Understanding the signal 

A bearish RSI divergence occurs when a certain asset logs a “higher high” while the momentum indicator makes a “lower high.”

In layman’s terms, buyers are still pushing the price of XRP higher, but the conviction behind those bids is not really strong. This discrepancy often indicates that the bulls are essentially losing steam.

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Hence, the most recent rally, while being rather impressive, might end up being just a flash in the pan (unfortunately for the bulls). 

The top pane of the chart shows XRP continuing its aggressive uptrend. The token has now surged above the $2.15 level to print a fresh local high. The white trendline connecting the recent peaks slopes upward. This means that the bulls are still in control of the price.

Conversely, the Relative Strength Index (RSI) in the bottom pane tells a different story. The corresponding peaks on the oscillator are trending downward. It is failing to enter the “overbought” territory with the same intensity as the previous rally. 

However, the implications are short-term. Market participants will likely look for a pullback to retest support levels around the $2.05–$2.10 region to see if the uptrend remains intact or if a deeper correction is underway.