The XRP course continues to recover. Between April 2021 and January 2022, it fell over 70 percent in a correction .
50-week moving average crucial for XRP/USD
On Feb 13, XRP/USD hit a high of $0.916, above its 50-week moving average (50-week EMA; red wave) of $0.833. The rise, while unconvincing, opened up opportunities for further upside. This is mainly due to the fact that there was a lively buying mood in this area in the past.
In the week ended July 27, 2020, the 50-week moving average was recaptured as support. Over a year ago, this red wave turned into resistance. XRP later surged over 820 percent to $1.98 in April 2021, its highest level in more than three years.
Conversely, XRP’s 50-week moving average acted as strong resistance multiple times during the bear cycles between 2018 and 2020. This shows that the wave can withstand bullish recovery sentiment, such as that seen in the current rally.
Can XRP reclaim the $1 mark?
XRP must now convincingly hold above its 50-week moving average. That could see it reclaiming the $1 mark in the coming days or weeks.
This level is about 25 percent higher than the current price level. In doing so, two important resistances in XRP must be overcome. The first resistance is the multi-month downward trend line , which has already put an end to many uptrends in the token since April 2021.
The second target is the 0.382 Fibonacci line, which lies between the $2.70 high and $0.10 low. This too was a hurdle for uptrends in XRP. However, it has already acted as support and resistance.
While the $1 level would be a lower high, it does not guarantee the end of the correction for XRP. Traders could take the opportunity to lock in their interim gains. This could see XRP pullback towards the $0.71 support as per the Fibonacci retracement chart.
Possible bear scenario
On the other hand, if XRP fails to make a convincing close above the 50-week moving average, it could see a pullback towards its 200-week moving average (blue wave) at $0.54.
Such a decline could leave the price stuck in a range between the 50-week moving average as resistance and the 200-week moving average as support. That could lead to another breakout to the downside. This bearish scenario was already seen from June 2018 to June 2019 as shown in the chart below.
XRP's surge to its record high of $3.55 in January 2018 coincided with a lower high in its RSI, thereby confirming a bearish divergence.
The price later fell below its 50-week moving average but found support at its 200-week moving average. The decline in the RSI stopped at 37, just above an oversold level that starts from 30.
XRP has stagnated within the said range between the moving averages, while the RSI has held above 37. Nevertheless, the price fell below the support at the 200-day moving average in June 2019 and traded as low as $0.10 in March 2020 .
If the fractal develops as it did in 2018 and 2019, XRP could break below its support at the 200-week moving average, which stands at $0.54, in the coming days and weeks. Such a decline would see XRP’s preliminary downside target drop to the 0.786 Fibonacci line at $0.43, as can be seen from the Fibonacci retracement chart. This was created by the low at $0.14 and the high at $1.52.
A further break below $0.43 would set the next downside target at $0.22. There has always been high trading volume at this level in the past.
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