The price of XRP has shown strength as it retests the $3 level, a crucial resistance point. Despite the positive momentum, one analyst is cautioning that the cryptocurrency could be vulnerable to a correction, urging investors to watch key support levels.
Momentum Key for XRP’s Daily Close
XRP has regained a critical level of support as the crypto market stabilizes following this week’s market downturn. Over the past week, the altcoin has been trading sideways, primarily between $2.85 and $3.10.
The cryptocurrency maintained the lower boundary as support during the recent market volatility, retesting the range lows. The price has increased by 7% from the lows of Monday to the $3.08 region, with a subsequent retracement to the $3.00 mark.
For the third time, XRP was rejected from local resistance in the $3.10 area on Wednesday, according to analyst Ali Martinez. This rejection could indicate a new attempt to correct the range lows, similar to prior attempts.
The altcoin’s price could plummet to $2.83 if it cannot maintain the present level of support and loses the mid-range area, risking a decline below the local range and a more severe correction.
In contrast, the cryptocurrency’s price could rally to the high levels of August, which are between $3.20 and $3.40, if favorable momentum persists and it breaks out of the critical resistance.
Similarly, Cryptoinsightuk, an analyst, observed that XRP had a positive daily close. He also stated that the “RSI crossed bullish, and even during this pullback, we have not observed any change in structure.”
Nevertheless, he recommended that the cryptocurrency maintain momentum by exhibiting a second day of follow-through price actions and trading volume. The market observer posited that a daily close above the $3.14 area will establish the foundation for a rally to the $3.40 resistance in the upcoming weeks.
Is A 2017-Like Rally Coming?
The altcoin has been consolidating within a bullish pennant since its July rally to its most recent all-time high (ATH) of $3.65, with the price compressing between the pattern’s resistance and support levels.
Additionally, GalaxyBTC, an analyst, observed that XRP has been compressing between two parallel levels, which is consistent with its 2017 strategy. The cryptocurrency was previously in equilibrium between the previous ATH level and the rally breakout level, which was converted into support.
After breaking out of this range following a consolidation period, the cryptocurrency experienced a significant rally to its 2018 ATH. This time, XRP turned the $1.70 area into support last November and has been consolidating between this level and the previous ATH for the past eight months, which could indicate that the rally is not yet complete.
The altcoin will experience a significant breakout once it surpasses the previous ATH resistance and converts it to support, if history is any indication.
Moreover, the analyst emphasized a critical level in the trading relationship between XRP and Bitcoin (BTC), stating that the 0.00003014 area has resisted the XRP/BTC chart for the past six years.
The market watcher believes the timing is ideal, as the XRP/BTC combination is near this resistance. If it were to break out, it would likely lead to a significant price discovery on the USD pair.
XRP is currently trading at $3.02, representing a 3.3% increase in the weekly timeframe as of this writing.
