The price of XRP, the native token of the XRP Ledger, surged 2.74% over the past 24 hours to $0.5294. This price increase comes after a period of sideways trading for XRP, with the token failing to break out above the $0.50 level over the past week.
XRP's market capitalization now stands at $28.07 billion, cementing its position as one of the top cryptocurrencies by market cap. Trading volume over the past 24 hours hit $1.46 billion, suggesting strong interest in the token among crypto traders.
Short-term momentum has turned positive for XRP, with the token gaining 2.74% over the past 24 hours. However, zooming out shows more mixed trends. Over the past month, XRP has dropped 26.54% against the US dollar. But over the past 6 months, the token has surged 40.60% as part of a broader recovery in crypto prices from the lows seen earlier this year.
So what's behind this latest XRP price surge? And can bulls sustain the upside momentum in the days ahead? Let's dig into the key technical factors.
XRP Breaks Out of Falling Wedge Pattern
From a technical analysis perspective, XRP has broken out of a falling wedge pattern that has constrained price action over the past month. This bullish breakout from a descending wedge is often seen as a trend reversal signal, as it marks a break from the bearish trend that formed the wedge.
XRP appeared to be carving out the falling wedge pattern throughout much of July. With each successive lower high and lower low, the upper and lower boundaries of the wedge took shape.
Bulls made several unsuccessful attempts to break out above the falling wedge resistance throughout July. But the breakout finally succeeded this week with strong buying volume behind the move.
With XRP now trading above both the descending upper wedge boundary as well as the key $0.50 psychological level, this falling wedge breakout opens up further upside potential. The measured move price target based on the height of the wedge is around $0.58. This lines up with horizontal resistance from April of this year.
Oversold Bounce Combined With Positive Divergence
In addition to the bullish falling wedge breakout, the surge in XRP comes as the token bounced up from oversold levels. The daily relative strength index (RSI) dipped below 30 last week before turning higher. This is a classic signal of oversold conditions.
At the same time, the RSI indicator formed a positive bullish divergence relative to price. As XRP printed lower lows throughout July, RSI made higher lows. This bullish divergence suggested waning downside momentum, which often precedes a trend reversal.
With XRP bouncing off oversold conditions and a positive RSI bullish divergence in place, traders jumped in anticipating an upside breakout. The technical confirmation came with the clean move above the falling wedge pattern.
Key Resistance Levels Overhead
While the path of least resistance appears to be to the upside following the falling wedge breakout, XRP still faces several levels of potential resistance overhead.
The first test will come near the $0.55 zone. This marks prior support turned resistance throughout the summer of 2022. A break above $0.55 would open the door for a retest of the June highs around $0.56.
Beyond that, the upper boundary of a large multi-month symmetrical triangle comes into play around $0.58. As mentioned earlier, this level aligns with the measured move target out of the falling wedge pattern.
If bulls can propel XRP through these layers of overhead resistance, the upside target is a return to the 200-day moving average, currently around $0.62. This would mark a nearly 20% gain from the current XRP price.
On the downside, initial support now comes in at $0.50. Below that, the upper boundary of the falling wedge near $0.485 marks the critical support to avoid another breakdown.
Bulls Look For Sustained Upside Momentum
After an extended period of lackluster price action and a seeming inability to gain any upside traction, the XRP breakout will have bulls looking for follow through. Sustaining the breakout and confirming the wedge pattern reversal will be key.
While the technical picture looks encouraging, XRP still faces macro headwinds that could limit upside potential. Ongoing legal issues with the SEC as well as broad economic uncertainty have weighed on investor sentiment. Additionally, XRP does not have a fixed supply limit like bitcoin, which could also constrain demand among certain investors.
However, from a short-term swing trading perspective, riding the bullish momentum higher looks to be the path of least resistance. The measured move and 200-day moving average targets represent reasonable upside objectives if XRP can maintain this breakout.
Bulls will now want to see strong buying volume drive XRP up through the resistance levels noted earlier. Sustaining trades above $0.55 and $0.58 would signal a bull market is likely underway for XRP in the near-term.
Can XRP Bulls Drive the Token Back to $1 This Year?
XRP trading around the $1 level marked the peak of the last major bull market in April-May 2021. Prices as high as $1.96 were seen at the peak frenzy. Given the difficulties and underperformance of XRP so far in 2022, is a return to $1 possible this year?
On the upside, clearing the resistance levels discussed above opens the door for a continued XRP price recovery. The technical picture would gain traction on a decisive move above $0.60 and the 200-day moving average. This could remove some of the negative sentiment that has dogged XRP for most of 2022.
Fundamentally, some potentially positive developments may aid the XRP price outlook. These include a conclusion of the lawsuit with the SEC providing regulatory clarity. Additionally, increased adoption of the XRP Ledger's technology in cross-border payments could improve XRP's utility.
However, significant macroeconomic challenges persist and could continue weighing on investment assets like cryptocurrencies. Ongoing monetary tightening by central banks, high inflation, and the specter of recession all stand as potential roadblocks.
Given the headwinds still in place, a sustained XRP price rally back to the $1 mark by year end may be too ambitious. More realistic targets in the $0.75 to $0.90 zone seem viable if bullish momentum persists. But anticipating a quick doubling in price from the current levels could be a stretch.
Overall, traders and investors will want to watch how XRP handles the overhead resistance levels in the days ahead. Decisive breaks above $0.55, $0.58, and the 200-day moving average would suggest the early stages of a new bullish trend. In that case, a march back toward the $1 level cannot be ruled out even in these uncertain markets.
Could This Be the Start of an XRP Altcoin Season?
The wider crypto markets have seen signs of rotation out of bitcoin dominance in recent weeks. Ethereum and select altcoins have begun outperforming bitcoin since mid-June. With XRP now showing signs of life after extended underperformance, traders will be watching to see if an altseason could be on the horizon.
Altcoin seasons mark periods where bitcoin sees reduced volatility and loses some dominance compared to the wider crypto markets. Money tends to rotate out of bitcoin and into large cap altcoins as well as speculative smaller cap projects.
XRP has yet to really participate in the gains posted by the likes of ETH, ADA, SOL, and DOGE over the past month. The breakout this week could signal the start of an XRP trend reversal where it plays catch up to the other majors.
However, bitcoin dominance remains well above 40% currently. For a true altcoin season, dominance often declines closer to the 30% zone. This marks a substantial rotation out of bitcoin relative to the overall crypto market capitalization.
While the early signs are encouraging, XRP bulls need to see more follow through to confirm an altseason uptrend is underway. The technical levels covered earlier will be key. XRP reclaiming its footing above $0.60 and the 200-day moving average would mark a bullish shift in the market structure.
At the same time, traders want bitcoin volatility and volume to remain relatively muted if an XRP-led altseason is to gain momentum. This would allow capital to continue flowing into large cap altcoins.
In summary, XRP's technical breakout is a positive development as it aims to catch up to the gains of other top altcoins. But bulls need to maintain upside momentum if this is truly the start of an XRP altseason.