According to U.Today, XRP has experienced a significant surge recently, reaching notable highs and boosting market confidence. However, technical analysis and current on-chain metrics suggest that this rally might be nearing its end. Three key factors indicate a potential reversal.
Firstly, the recent price increase of XRP has not been accompanied by a steady rise in trading volume. Although the price managed to surpass $1.06 before pulling back, the volume has been decreasing over the past few sessions. This lack of consistent buying interest suggests that bullish momentum may soon diminish, often signaling market exhaustion.
Secondly, on-chain data reveals a significant drop in the volume of XRP payments after peaking in mid-November. This decline in activity is mirrored by a reduction in the number of active accounts, indicating decreased network usage. A fall in transaction volume within the XRP ecosystem could weaken the price's underlying support, potentially leading to a correction.
Lastly, XRP's Relative Strength Index (RSI) is currently at 85, remaining in the overbought zone for an extended period. High RSI values typically indicate an overheated market, making the asset vulnerable to a downturn. Profit-taking at these levels could further drive the price down as bearish forces gain control.
The $1.50 level is crucial for XRP's support, with the next significant support around $1.20. If the price breaks below this range, it may result in a more severe correction. However, if buyers step in to defend the $1.05 level, XRP might consolidate before attempting another rally.
Despite XRP's impressive recent performance, caution is advised due to warning signs such as declining volume, reduced payment activity, and overbought technical indicators. Investors should closely monitor these metrics to assess the sustainability of the current uptrend.
