XRP has entered a corrective phase after staging an impressive rally to $2.65 in early May, with the cryptocurrency currently trading at around $2.50.
This pullback has brought XRP to a critical technical junction as it hovers between the 38.2% Fibonacci retracement level at $2.42 and the 50% retracement level at $2.36 near the major psychological barrier and area of interest at $2.30, presenting a decisive moment that could determine the direction of its next major move.
XRP Breakout Correction
Price action shows that XRP broke out of a prolonged consolidation pattern in early May, surging approximately 27% before encountering resistance and beginning its retracement.
The cryptocurrency has established a series of lower highs since reaching its peak, though it appears to be finding support at the key Fibonacci retracement levels. This suggests that while sellers have gained the upper hand in the short term, buyers remain active at strategic support zones.
XRP is currently trading at $2.5000 above the 38.2% level, indicating that bulls are attempting to maintain control of the market structure. If this support fails to hold, the next critical level would be the 50% Fibonacci retracement at $2.36, followed by the 61.8% level at $2.29, which coincides with the area where the recent breakout occurred.
The long-term ascending trendline that has supported XRP since early April remains intact, suggesting that the overall bullish structure hasn’t been compromised despite the recent pullback. This trendline, combined with the 100% Fibonacci level at $2.07, forms a strong support confluence that should provide a solid floor if deeper retracement materializes.
Potential Trend Reversal
The moving average configuration reveals a bullish alignment, with the blue 100 SMA above the red 200 SMA. Both moving averages are sloping upward, confirming a healthy uptrend.
Although XRP has pulled back from its recent highs, it still trades above both moving averages, indicating underlying strength in the trend. The recent intersection of these moving averages with the ascending trendline creates a significant support zone around $2.30 that bulls would need to defend to maintain upward momentum.
The stochastic oscillator has moved lower from the overbought territory and is currently heading downward through the midpoint of its range, suggesting that bearish momentum is still in play for the short term.
However, the oscillator is approaching the lower levels of its range without having reached oversold conditions yet, indicating that there’s still room for further downside before a potential reversal. Traders should watch for a potential bullish crossover or a turn upward from the current levels, which could signal a resumption of the uptrend.
Meanwhile, the MACD indicator in the middle panel shows that the blue line has crossed below the orange signal line, confirming bearish momentum in the near term. The histogram bars have turned negative, though their diminishing size suggests that selling pressure might be waning. This potential weakening of bearish momentum could set the stage for a bullish reversal if support levels attract sustained buying interest.