XRP Price Rally Cools On Escalating Death Cross Risks
XRP price sent mixed signals on Wednesday, moving sideways after a modest rebound from its Monday lows. As bulls and sellers struggle to find direction, higher key support is expected to play a crucial role in the coming few days.
XRP Price Seeking Higher Support
XRP price has defended its lifeline support at $0.52 after its reversal from a $0.43 low reached on Monday was rejected under $0.52. It appears the bulls ran out of momentum due to the general market uncertainty about high interest rates in the US, which continues to impact trader conviction.
The Relative Strength Index (RSI) return from the oversold area into the neutral region supported the initial bounce back in Ripple price. However, failure to sustain movement above 50 saw some traders retreat, possibly to wait for another confirmation of the uptrend.
Short-term support at $0.5 is important and must be defended at all costs if bulls desire for XRP to push above $0.6 resistance. However, such a bullish outcome cannot be guaranteed, considering two recently validated death cross patterns.
Note that a death cross occurs when a short-term moving average, like the 50-day EMA in Ripple’s case, crosses below a long-term one like the 200-day EMA, signaling prospective bearish price action.
The first death cross occurred after the 20-day EMA in blue crossed below the 50-day EMA. These patterns often precede downward price trends, which means that XRP price could slide below $0.5, increasing downside risk to $0.46. Additionally, Ripple’s position below the three EMAs further disadvantages the bulls, bringing solid challenges to the uptrend.
Based on insights from the derivatives market on Coinglass, Ripple is still in the woods and needs another push to dissociate from potential bearish entanglements. After the open interest exploded, reaching $884 million on August 1, the trend has been downward, with only $476 million recorded on August 7.
It is worth noting that decreasing open interest suggests declining market activity and potential XRP price weakness. It depicts fewer traders holding positions, which may escalate the risk of a correction.
On the other hand, members of the XRP community are earnestly hoping that Ripple will explore a settlement deal with the Securities and Exchange Commission (SEC) to end the longstanding case.
Should the outcome of the case favor Ripple, XRP could be the biggest benefactor. The masses are likely to seek exposure, potentially fueling a major rally above $1 within a short time.
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