Ripple and Stellar Surge: Layer 1 Tokens Find Bottom Amid Crypto Recovery

Ripple (XRP) and Stellar (XLM) have both experienced significant gains on Friday, raising questions about the potential for further upside and whether these layer 1 blockchain tokens have found a bottom following the recent crypto market downturn.

XRP has surged by more than 8% on Friday, with the daily chart indicating that a local bottom was likely reached on February 3. The strong buying interest at the major $1.96 horizontal support level is evident from the long wick to the downside. However, the path ahead may not be smooth, as horizontal resistance and a descending trendline lie in wait. If the bulls can push the price beyond this resistance, a new local high could be in the cards. Conversely, if the price is rejected, a return to support at $2.32 and then the major horizontal support below it is possible.

The monthly chart for XRP presents an interesting picture. Price structure appears to be forming above the major horizontal support at $1.96, and the long wick down to this level confirms this. However, the rapid price increase may make it difficult for the market to absorb this move in the near future, suggesting that more sideways consolidation is likely. At the bottom of the chart, the Stochastic RSI momentum indicator is showing a potential cross back down.

In contrast to XRP, XLM has been in a downtrend since November 2021. The price has fallen to the major horizontal support at $0.31, with lower highs and lows along the way. To begin reversing the downtrend, the latest bounce needs to take the price through the current resistance and the descending trendline.

The bigger picture for XLM suggests that the downtrend may be bottoming. The current candle has a long wick to the downside, confirming strong horizontal support below. However, the Stochastic RSI at the bottom of the chart indicates that the indicator lines are continuing to cross down past the midpoint, with only two days left for confirmation. This could prove to be a major headwind going forward, potentially signaling a longer period of sideways price action until the indicators reach the bottom or turn back up from the 20.00 level.