Key Takeaways
What was the significance of the $2.7 area on the price chart?
Analysis showed that it has been a key support since August. The build-up of short liquidation levels meant it could be retested before the next bearish move.
What would convince swing traders to lean bullishly?
If the $2.8 area is reclaimed as a demand zone, it would show traders that buyers were strong enough to attempt a recovery past $3.
Ripple [XRP] was trading at the $2.42 mark at the time of writing, and signaled bearish momentum in the short-term. Sellers had the upper hand for now and could force a price move toward the psychological $2 support.
Technical analysis shows XRP could see a 22% price drop
The swing points on the weekly timeframe were marked in green, at $0.486 and $3.4.
The rally from $1.61 to $3.66 that began in April meant that the weekly structure was bullish, making it the long-term outlook for XRP. A move below $1.6 would be needed to shift the swing structure bearishly.
Source: XRP/USDT on TradingView
The daily chart above showed a bearish structure. The internal structure’s local high and low are marked in orange at $3.1 and $2.7. The swing structure was bullish, due to the rally from $1.9 to $3.66 in June and July.
However, the bias for now is bearish. This is because XRP bulls had defended the $2.7-$2.8 demand zone from bearish retests since July, but the recent selling pressure forced the price to break down beneath this support.
This breakdown left behind a large imbalance, highlighted by the white box. This zone, from $2.5-$2.77, represented a sturdy obstacle for the buyers.
The Moving Averages were bearish, as was the Awesome Oscillator. However, the CMF has climbed to +0.05, at press time, a sign of significant buying pressure. This buying would likely be insufficient to drive prices to $2.8 and beyond.
The current bearish structure means that an XRP price drop to $1.9 and $1.6 is likely. A daily session close below $2.28 would increase the chances of the expected 22% price drop.
What impact could the liquidation levels overhead have on XRP?
Source: CoinGlass
The imbalance underneath the $2.8 area has extra significance. The liquidation heatmap showed a cluster of short liquidation levels built up at $2.67. This magnetic zone is likely to pull XRP to $2.7 in the coming days.
Given the bearish internal structure and the $2.7 supply zone, any bounce is likely to trigger a renewed downward price move. However, Bitcoin [BTC] could also have an impact on XRP trends.
A Bitcoin rally beyond $117k would indicate bullish strength, and XRP traders can anticipate a recovery above $3.1.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
