XRP Primed for Correction if Crucial Support Fails
Ripple's cryptocurrency is poised to retrace as technical indicators have turned bearish.
- Ripple's XRP token is up more than 50% in the past two days.
- Given the significance of the recent upswing, a particular technical index suggests that this cryptocurrency sits in overbought territory.
- A break at the $0.57 support level could trigger a correction to $0.50 or even $0.36.
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Ripple’s XRP token is experiencing a period of high volatility, as FOMO seems to have taken over the entire cryptocurrency market.
XRP Technicals Flash Sell Signal
Despite mounting buying pressure behind XRP, the coin’s price may be bound for a short-term retracement before rising to new yearly highs. XRP has enjoyed an impressive bull rally over the past two days rising by more than 50%, from a low of $0.44 to a high of $0.66.
Although XRP appears to be poised for greater highs, a price correction may occur before that happens. The TD sequential indicator presented a sell signal on XRP’s 4-hour chart. The bearish formation developed as a green nine candlestick underneath the setup resistance trendline at $0.61.
This suggests that XRP could be poised for a correction in the form of one to four 4-hour candlesticks before the uptrend resumes.
It is worth noting that the TD sequential indicator has been incredibly accurate at predicting local tops. The last four times that this technical index flashed sell signals on the 4-hour chart, the token retraced by 37.60%, 7.70%, 20.70%, and 18.20%, respectively.
Investor Sentiment Bullish
These facts mean that the current forecast should be considered with caution, despite overwhelmingly bullish sentiment among investors.
A spike in selling pressure around the current price levels could see XRP close below the 61.8% Fibonacci retracement level at $0.57. If this were to happen, the token could dive further towards the 50% or even the 23.6% Fibonacci retracement level.
These support zones sit at $0.50 and $0.36, respectively.
Nonetheless, a 4-hour candlestick close above the recent high of $0.66 may jeopardize bearish investor sentiment.
If XRP moves past this resistance barrier, its price will likely rise to $1.00. On its way up, the $0.78 level may serve as a potential hurdle that must be broken for the bullish impulse to gain momentum.
At the time of writing this author held Bitcoin and Ethereum.
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