Where is the perfect entry point for XRP?

XRP price is finding an area of ​​support after the recent downtrend. This short-term correction is the result of the previous breakout and its correlation with Bitcoin. The recent bearish trend notwithstanding, two on-chain indicators show a bright future for XRP.

On-Chain Ads

On-chain indicators are blinking bullish signals for XRP.

The number of active addresses in an hour shows a sharp increase from 4,621 to 19,629 in the last 24 hours. This shows that investor interest in XRP is growing at current prices. This is a common strong pump signal, indicating that XRP is ready to move higher.

On February 12, the number of active addresses increased from 5,076 to 23,569 for one hour. Interestingly, the price has increased by around 14% in the following 24 hours.

Number of active addresses per hour | Source: Santiment

Also, the recent divergence between on-chain price and volume for XRP has also increased sharply. From Feb. 16-18, total on-chain transaction volume grew from $1.95 billion to $2.95 billion, an increase of 51%.

However, the nearly 12% price decline over the same period signals divergence. This technical formation predicts a bullish outlook for XRP. And it shows a clear concern of on-chain participants about the current price level.

On-chain transaction volume chart | Source: Santiment

Technical indicators

4 hour chart

XRP appears to be stabilizing above the 4-hour demand zone, extending from $0.746 to $0.777 after breaking out of a rising wedge on Feb. 17, according to indicators.

A recovery rally is likely to propel XRP nearly 10% more to the $0.853 region. If the buying pressure continues to increase, the token can retest the resistance area at $0.913.

Source: TradingView

Despite the bullish signs on the chain, a potential surge in selling pressure could see XRP price forming a 4-hour candle that closes below the $0.746 region. This development will favor the bears and invalidate the bullish thesis.

In this situation, the token is likely to drop 8% and head towards the $0.687 support. However, this is a short-term bearish view and does not disrupt the long-term bullish outlook. Therefore, the resurgence of buying pressure around the $0.687 – $0.651 area will play a key role in sparking another rally for XRP.

1 hour chart

Since August 2021, XRP has been trading in a descending channel, with the midpoint (white dot) being the key level for many months. This level used to be one of the key support areas in October, but has acted as a strong resistance since late November.

 Source: TradingView

In the last 2 weeks, the price seems to have broken this midpoint, although the bulls have yet to clear the horizontal resistance at $0.89. In the last 20 days, the price has fallen below the middle again, bouncing between the $0.76 support range and the $0.84 supply zone.

Therefore, a move back to $0.84-$0.86 should present a selling opportunity in the near term.

The hourly chart’s RSI sits at 50, while the stochastics RSI is floating in the overbought territory. This suggests that XRP could test the $0.8072 resistance in the next few hours.

OBV has been falling for the past few days. Despite the price dipping just below the key resistance area, buying and selling volumes have balanced out over the past two weeks.

The balanced buying volume shows that bears and bulls are fighting, but there is no clear winner yet. XRP has bounced off the $0.76 zone for the past few hours, but the $0.89 resistance remains strong.

Source: TradingView

A bullish scenario seems unlikely at the moment, especially as Bitcoin falls towards $39,000 in the next few days. Even if BTC can rally back above $42,000, XRP will need strong demand to break the $0.89 area. Therefore, $0.84 and $0.89 may not be good areas to buy XRP.

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