XRP Price Surge 6% But Faces Bearish Reversal At $2.25

XRP bulls are on high alert as the cryptocurrency's price approaches a critical level of $2.25. This price point is significant because it could signal a bearish reversal, potentially leading to a downward trend. The recent price surge above $2.00 has been a positive indicator, but the market remains cautious. A confirmed breakout above the trendline could pave the way for a surge toward $2.50 and possibly $2.70, but this would require extra safety measures to ensure sustainability.

Traders are advised not to fall into the trap of buying XRP impulsively after the break of the six-week trendline resistance. The possibility of a short squeeze means that traders could look for opportunities to short XRP after a minor bounce. The price chart on the daily timeframe shows a bearish structure in play. The lower high at $2.23 has not yet been breached, even though the trendline resistance was broken. Hence, the bearish outlook must be retained by traders.

The RSI is at 54, showing a bullish momentum shift. This is an early sign of a reversal, but it is overshadowed by the OBV’s finding. The volume indicator is in a downtrend alongside the price. Until it can set a new higher high to signal steady demand, investors and traders must be careful of taking bullish positions. The Fibonacci retracement levels show that $2.46 and $2.7 are formidable resistance levels beyond the local resistance at $2.23.

The Open Interest (OI) behind XRP has increased over the past 24 hours as the price rallied 6%. This increase in OI was not accompanied by a rise in spot CVD. This indicates a lack of buying pressure in the spot markets. Therefore, it is more likely that the recent rally was driven by derivatives and could falter soon. The liquidation heatmap reinforces this view. It shows a cluster of high-leverage liquidations just above the XRP market price, stretching to $2.25. The increased cumulative leverage overhead means that short sellers could get hunted in the short term before a bear reversal. This short squeeze could yield a short-term bounce and also give traders a chance to go short.

The $2.25 level is crucial because it represents a potential trend reversal from bullish to bearish. If the neckline support breaks, it could indicate a significant change in market sentiment. The recent bullish momentum has been fast, with XRP gaining strength and breaking past $2.10. However, the market is divided on whether this is a bullish breakout or a bearish rejection. The legal battle between Ripple and the Securities and Exchange Commission (SEC) has also been a significant factor in XRP's price movements. The case is nearing a conclusion, and any developments could have a substantial impact on the cryptocurrency's price. The market is closely watching for any updates that could provide clarity on the legal status of XRP.

In summary, XRP bulls are on alert as the cryptocurrency approaches a critical level of $2.25. This price point could signal a bearish reversal, and the market is closely watching for any signs of a trend change. The recent price surge and legal developments have added to the market's volatility, and investors are advised to exercise caution.