XRP's 13% Gain: A Buy Signal or Bearish Divergence?

XRP Recovers From Dip Following a 13% Daily Gain, Possible Buy in Play

XRP, the native cryptocurrency of Ripple, has shown resilience in the face of recent market volatility, recovering from a dip and posting a 13% daily gain. This positive performance has sparked interest among traders and analysts, who are now considering the possibility of a buy-in.

The recovery comes after XRP hit a multimonth low, raising concerns about its bullish momentum. However, the altcoin's recent volatility has put its long-term outlook in question. A COINOTAG analysis highlights that XRP's relative strength index (RSI) is signaling weakening buying pressure, suggesting further downside risk.

XRP's price may face a 23% correction amid bearish signals on key charts, demanding attention from crypto traders and investors. The altcoin's impressive surge over the past three months has captivated the crypto market, soaring from $0.50 to an all-time high of $3.40—a staggering 580% increase. However, the altcoin's recent price action reveals concerning technical signals, particularly a bearish divergence developing on both the daily and weekly charts.

The fluctuations in liquidity have been exacerbated by external factors, including a recent flash crash tied to a non-crypto political event. This scenario suggests that buying interest might be waning, culminating in an erosion of bullish momentum for XRP. As depicted in the charts, XRP has managed to establish higher highs in price, yet its relative strength index (RSI) has charted lower highs—a classic indication of diminishing buyer strength. Both the daily and weekly RSI trends are falling from overbought conditions, hinting at a potential market reversal.

Should these bearish divergences materialize, XRP faces the risk of retreating below the critical threshold of $2, implying a drop of approximately 23% from its current value, as new support levels develop at lower price points.

Analyzing XRP's current market position, it is essential to contextualize its prior highs. Despite its prior highs, the altcoin has been met with increased volatility, often characteristic of the broader cryptocurrency landscape. According to recent data, XRP's price retracement could be indicative of larger market trends, where fear of further corrections is palpable among traders.