XRP’s price recently registered a multimonth low at $1.78 during a correction before quickly recovering above $2.50 on the daily chart. However, the altcoin is facing a critical test to invalidate a key bearish signal, which could shift the market in favor of the sellers.
XRP Shows Bearish Divergence on the Daily and Weekly Chart
XRP’s parabolic rally over the past three months saw its value surge from $0.50 to its all-time high range at $3.40, marking a 580% increase. The altcoin broke through multi-year resistance levels, and in January, XRP recorded its highest monthly close at $3.03. However, the recent flash crash due to a non-crypto political event indicated that buyer liquidity is slowly draining. With the market plagued by volatility, XRP’s long-term charts reveal the formation of a bearish divergence on both the daily and weekly charts.
As seen in the chart, XRP’s price has formed a higher high over the past few weeks, while the Relative Strength Index (RSI) has formed a lower high. The RSI on both charts trended down from an overbought region, signaling that buyers are slowing down and losing momentum. While XRP has managed to invalidate previous divergences on lower time frames (LTF), the bearish divergence on the 1-day and weekly charts raises concerns, as higher time frame (HTF) charts generally dictate the dominant market trend. The potential consequence of these bearish divergences is a move below $2, which would represent a 23% drop from its current value. This risk has increased, as XRP recently formed a new low at $1.78, creating new liquidity pockets.
Will XRP Invalidate Its Bearish Thesis?
A key part of technical analysis is understanding that every signal or pattern comes with an invalidation level. XRP’s bearish divergence could be negated if the altcoin can maintain a position above $2.90 on the daily chart. The $2.90 level was XRP’s previous higher high formed in December, which also served as a support level after XRP re-tested its previous all-time high at $3.40. Spot activity on platforms like Binance and Coinbase was notably concentrated around $2.90, which helped push the altcoin above $3 in mid-January. A recovery above $2.90 would help to re-establish a bullish market structure, reducing the impact of XRP’s recent bearish lows. However, time is crucial in these conditions, as a prolonged lack of clear directional bias could benefit the bears, as sellers were the primary market movers during the last major price move.
Conclusion
XRP’s recent price action has put the altcoin in a crucial position, as it faces a bearish divergence on both the daily and weekly charts. While it has managed to bounce back from previous lows, the potential for another move below $2 remains, particularly if the altcoin fails to reclaim $2.90. Bulls must defend this key level to prevent further downside and preserve the possibility of a bullish market structure. On the other hand, continued weakness could lead to further testing of support levels and a possible retest of $2.
FAQs
What is a bearish divergence?
A bearish divergence occurs when an asset’s price makes a higher high, but its momentum indicator, like the Relative Strength Index (RSI), makes a lower high. This indicates a weakening buying momentum and signals a potential reversal or correction in price.
What level should XRP maintain to stay bullish?
XRP must stay above $2.90 on the daily chart to invalidate the bearish divergence and keep a bullish market structure intact.
Why is the $2.90 level important for XRP?
The $2.90 level represents XRP’s previous higher high formed in December, which also acted as support during its previous price surge. It is seen as a key level for bullish momentum to continue.
I am Toby Rothschild, Co-Founder of Spearmint and author at Coinography, and a strategist focused on advancing Web3 innovation, digital ecosystems, and the future of decentralized technology. I combine product thinking, creative leadership, and deep interest in emerging trends to help shape how individuals and organizations interact with the next generation of digital systems.
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