XRP Tests Critical $2 Support as Bulls Guard December’s Key Level
Market Structure Shifts Lower
- XRP’s monthly losses reach 12.5% but it bounces from $1.97, the same monthly low we saw in August.
- oscillators have cleared overbought conditions.
- The 50-day EMA is likely to offer solid support.
The price of XRP is currently $1.97, according to data from CoinGecko, as the cryptocurrency sheds 12.5% over the past month. XRP has remained above the $2 level, which many analysts describe as a make-or-break level. In this case, the set-up is “not a downturn but a consolidation phase that could precede a substantial price action,” according to one analyst. The biggest question for traders is whether bulls can protect the key support around that level, which has held since August. Or could bears push through on this occasion?
| Metric | Value |
|---|---|
| Asset | XRP (XRP) |
| Current Price | $1.97 |
| Weekly Performance | -3.59% |
| Monthly Performance | -12.48% |
| RSI (Relative Strength Index) | 38.6 |
| ADX (Average Directional Index) | 19.1 |
| MACD (MACD Level) | -0.06 |
| CCI (Commodity Channel Index, 20-period) | -113.42 |
Momentum Resets From December Peak – Room to Run Returns
The Relative Strength Index currently stands at 38.58 on the daily timeframe, this is the first oversold reading since the August washout that proceeded a 40% rally. It’s also the first overbought extreme above 70 since early December has dropped below the regulation zone of 30 at 29.22. The biggest confirmation will be the turn up of the 8-dma and a close back above the psychological $50 as the 8-days spins lower at $48.80.
What is interesting to note is the behavior of the RSI during this drop – it has been more of a methodical decline rather than a capitulation washout. Previous momentum resets in September and October all lured in new buyers around the 40 RSI area and sparked a new bullish impulse each time. Hence, for swing traders, this neutral oscillator reading should be more of a chance than a doom, especially given potential tailwinds from institutional news flows such as the Fed Master Account access.
ADX at 19.06 Keeps Range Traders in Command
With a reading of 19.06, the ADX entry indicates we are in a weak directional moving state, meaning the market has not made up its mind in either direction. This reading below 20 explains why prices have been going back and forth between support and resistance levels, as opposed to showing a strong trend in either direction. The spread between the +DI and the -DI is still very close, so neither the bulls nor the bears have really taken over at this time.
When checking the daily time frame for XRP during this extended 8-month range-bound action, one might notice the Average Directional Index (ADX) is running extremely low. The ADX reveals the strength of a trend but not the direction, and its readings below notable 20 levels confirm consolidation phases. Nearing 8 bars since the last noteworthy ADX cross, the trend strength indication is in notable consolidation territory, indicating that it is increasingly likely an expansion of a move will develop soon.
50-Day EMA at $2.21 Transforms From Support to Resistance
Looking ahead, we should monitor the pairs for more downside, especially the Bitcoin pair. It’s on the verge of losing the final life raft of support, that 78.6% retracement at 0.000028. A daily close beneath that and we plunge into no man’s land. The next support wouldn’t be found until 0.000020, a level not seen since late November. The USD pair doesn’t look much better. A daily close under this $2 support and the bottom drops out until we’re nearing the 2017 high around $0.30.
Even more telling is the compression between the shorter-term EMAs — the 10-day and 20-day are currently just 4 cents apart. In other words, they look like a coiled spring, and whether it pops to the upside or breaks to the downside will likely determine the price’s course for the next week at least. The 100-day EMA offers further away support at $2.38, and the 200-day EMA is all the way down at $1.87, presenting a safety net over 5% below the current price. This structure seems to indicate bulls will have to overcome $2.21 and hold to flip the technicals bullish again.
Support at $1.97 Matches August’s Proven Floor
There are several resistance levels close together, starting with the monthly pivot at $2.19. This is a significant level as it acts as a ‘pivot point’ from which price can turn in either direction, in this case being used as overhead resistance. It converges with the 50-day EMA which is a lesser resistance level.
Buyers are looking to reclaim the key $2 level, which coincides with the 23.6% FIB level, with the 38.2% Fib level at $2.09 establishing a base for bullish momentum targeting the 50-day EMA at $2.15. Additional resistance is seen at the 50% FIB at $2.21 and $2.27 based on the August 5 high before the weekly R1 pivot at $2.47 would be eyed.
The structure shows that buyers have the upper hand as long as they hold $1.97 on any pullbacks. The area turned from resistance in the summer consolidation phase to solid support that has been tested six times. And with every test, new buyers entered the market, indicating that sub-$2 XRP is seen as a value zone by institutions.
Bulls Need Daily Close Above $2.21 to Revive Uptrend
Bulls need to see an emphatic daily close above the 50-day EMA at $2.21 to indicate that the pullback has run its course. This would likely set the stage for a test of the December broken support at $2.45, particularly if the Fed Master Account story begins to resonate with the broader investment community. A breach of $2.45 paves the way for a retest of December’s $2.90 peak.
If the XRP price falls below $1.90, the next support level can be seen at the 200-day EMA of $1.87. Conversely, the bullish case plays out if XRP can consolidate below $2.00 resistance and make momentum moves to clear $2.01 and $2.02 levels on volume. This would likely result in organic interest commencing at the $2.01 level. If $2.01 falls the price will revisit $2.03 and the key $2.05 level.
With an oversold bounce in the works and support holding at a familiar area, XRP is likely to consolidate in the $1.97–$2.21 range in the short term as momentum oscillators cool off. A period of sideways consolidation would help gather steam for the subsequent move, with the Fed news as well as the potential for spot market relief serving as significant macro drivers that tend to lean bullish only after technicals align.
