January’s XRP XRP $3.12 price rally risks hitting a point of exhaustion due to an emerging bearish reversal signal.
XRP price chart hints at 25% correction
XRP has seen a remarkable 50% surge in January, reaching a peak of $3.39 on January 18, its highest level in nearly seven years. However, this explosive rally might encounter some resistance as technical indicators point to a potential 25% correction.One concerning signal is the growing bearish divergence between XRP’s price and its daily Relative Strength Index (RSI). While the price has been climbing to new multi-year highs, the RSI, a key momentum indicator, has been trending downward, indicating weakening upward momentum. This divergence suggests that the rally could be losing steam, increasing the chances of a price reversal in the near future.
Additionally, XRP’s price is now significantly above its 50-day exponential moving average (EMA), a critical technical support level. As of January 18, the 50-day EMA sits around $2.28, about 25% lower than XRP’s current price of $3.07. In the past, when rallies have been overextended, prices often pull back to revisit their EMA levels as traders lock in profits and the market stabilizes. This was evident during a major correction in 2018, which followed a similar bearish divergence. Furthermore, XRP’s RSI is currently at 66.87, approaching the overbought zone of 70. While it hasn’t reached that threshold yet, the downward trend of the RSI signals that buying pressure is starting to fade, which could add further downward pressure and drive the price closer to the $2.28 support level.
Is the XRP bull run over?
As mentioned earlier, the bearish divergence in XRP’s price increases the chances of a pullback toward $2.28, which coincides with the upper trendline of its current bull flag pattern.A bull flag pattern typically forms when the price consolidates within a downward-sloping parallel channel after a strong upward movement. It usually resolves when the price breaks above the upper trendline, continuing its rise by an amount roughly equal to the previous uptrend. XRP has already entered the breakout phase of this bull flag pattern. However, it’s common for the price to retest the upper trendline after a breakout to confirm it as new support. A successful retest would validate the breakout and provide an opportunity for new buyers to enter the market. If XRP bounces off this trendline, it strengthens the bullish case and sets the stage for a potential move toward the original target of $4.42, a 40% gain from the current price. XRP’s long-term outlook remains positive, further supported by the potential launch of spot XRP exchange-traded funds (ETFs) in the U.S. Analysts at JP Morgan predict that these funds could attract between $4 billion and $8 billion in assets under management.
However, if XRP fails to maintain its position above the flag’s upper trendline, it could invalidate the bullish setup entirely. In this case, the next target on the downside would be the lower trendline near $1.90, a level that previously acted as support in December. A break below $1.90 would shift the trend to a more bearish outlook, potentially triggering further declines toward the 200-day EMA (the blue wave), which sits around $1.35.
Conclusion
XRP’s recent surge has encountered signs of weakening momentum, with bearish divergence forming between the price and RSI. This suggests a correction is likely in the near term, with a possible drop to $2.28, which would align with key technical support. If the price fails to maintain support, further declines could test $1.90 or even $1.35. However, the long-term outlook remains optimistic, especially with the potential launch of spot XRP ETFs and bullish market sentiment.
FAQs
What is bearish divergence in XRP’s chart?
Bearish divergence occurs when the price of an asset continues to rise, but the relative strength index (RSI) declines. This indicates weakening momentum and may signal a potential price reversal.
What is the significance of the 50-day EMA for XRP?
The 50-day EMA is a key technical support level that traders watch. XRP is currently well above this level, but a drop to $2.28 could bring the price closer to this important support.
What happens if XRP breaks below $1.90?
If XRP fails to hold above $1.90, it may invalidate the bullish setup, and the price could face deeper declines, potentially heading toward $1.35.
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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