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Despite recent highs, XRP might be on shaky ground. Technical analysis reveals declining trading volumes and an overbought RSI—classic precursors to a market downturn. With on-chain metrics showing reduced activity, investors brace for a possible reversal.
XRP’s Rally Faces Key Warning Signs
Recently, XRP has had an incredible run, reaching new heights and inspiring optimism in the market. Nevertheless, the current on-chain data and technical analysis suggest that the rally might be nearing its conclusion.
According to U.Today, it appears like a turnaround is on the horizon based on these three indicators. The recent spike in XRP price has not been accompanied by a corresponding rise in trading volume.
While the price did manage to breach above $1.06 before backtracking, declining volume over the last several sessions indicates a lack of continuous buying activity.
Market weariness is often indicated by this divergence, which implies that bullish momentum may soon ebb. The amount of XRP payments has dropped significantly, according to on-chain data, after reaching a peak in mid-November.
Declining XRP Activity Signals Reduced Network Engagement
Along with this drop in activity, the number of active accounts has also been going down, which means that fewer people are using the network. The price's fundamental support can be eroded, leading to a correction, if the volume of transactions inside the XRP ecosystem decreases.
The Relative Strength Index (RSI) for XRP has been in the overbought zone for quite some time now, and it is now at 85.
When the relative strength index (RSI) is very high, it usually means that the market is too hot and the asset could fall in value. Bears may seize control if profit-taking occurs at these levels, leading to a further decrease in price.
Key Support Levels Could Determine XRP’s Next Move
The support for XRP is crucial at the $1.50 level. If the price breaks out of the next significant support area, which is around $1.20, we could see a more severe drop.
However, if buyers step in to protect $1.05, XRP might consolidate before trying another climb. Caution is advised in light of warning flags such as dropping volume, decreased payment activity, and overbought technical indicators, notwithstanding XRP's spectacular recent rise.
These parameters should be closely monitored by investors in order to determine if the present increase can be sustained.
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