Preface

Last week witnessed a surge of enthusiasm among XRP advocates after Ripple announced the U.S. Securities and Exchange Commission had dropped its prolonged case. The development came as a relief after a period of legal uncertainty that weighed heavily on XRP's performance during previous bull markets. Despite the excitement and the chatter about XRP-based ETFs and potential strategic reserves, the current technical indicators present a less optimistic scenario. XRP remains trapped in a narrow trading range between $2.30 and $2.50 amidst warning signs of a potential bearish trend reversal.

Lazy bag

The three-line break chart has shown a shift with bearish signals, linked to the historical beginnings of bearish markets. Technical indicators like MACD and Bollinger Bands underscore downside risks, unless XRP can break above $3 to revive a bullish outlook.

Main Body

In the aftermath of the SEC's decision to drop its legal challenge against Ripple, the cryptocurrency market exhibited mixed reactions, particularly concerning XRP. The removal of legal uncertainty momentarily sparked optimism, boosting XRP prices by over 11% to reach $2.59. However, the subsequent price action failed to sustain this upward movement. Several technical indicators are now heralding the potential onset of a bearish trend.

A notable development is seen on the three-line break chart. This chart type, which filters out noise by focusing purely on shifts in price direction, displayed a new red bar in the early weeks of this month, remaining unaltered even after the SEC announcement. This red bar marks a notable transition, hinting at a bearish momentum that previously signaled the start of extended bear markets in past years.

Complementing these findings, the MACD histogram on the weekly chart continues to deepen below the zero line, indicating a strengthening downward drive. Having flipped to positive territory back in November, which saw XRP rally from $1 past $3, it has since returned to a bearish configuration. The bearish crossover of the 5- and 10-week simple moving averages further suggests that the path of least resistance has succumbed to bearish pressure.

The Bollinger Bands, another crucial indicator, react to price volatility by expanding during significant price rallies. Historically, the distinct widening of these bands as witnessed in late 2024 often precedes a reversal or stabilization of prices at lower levels, reminiscent of downturns after early 2018 and mid-2021 rallies.

For XRP to nullify these bearish setups and paint a brighter technical picture, a definitive upward move to affix itself above $3 is essential. Breaking this threshold could disrupt the current sequence of lower highs and signal the potential renewal of a bullish trend. While speculation on XRP achieving levels as high as $10 by the decade's end circulates among analysts, the token's ability to redefine its trajectory hinges heavily on breaching this pivotal resistance.

Key Insights Table