Disclaimer: The conclusions of the following analysis are the sole opinions of the author and should not be taken as investment advice.
XRP’s recent growth plateaued near the $0.39 mark after the recent spike in selling strength turned the demand region into a supply region (green, rectangle).
Therefore, the gradual increase in the selling pressure of the altcoin led to a bearish reversal in the EMA Ribbons. This phase of decline resulted in an ascending distribution of the channel in the daily time frame.
Meanwhile, buyers couldn’t find compelling rebound patterns to stop the breakout’s bleeding. A close above the $0.3319 level would help the buyers recover their short-term strength. At press time, XRP was trading at $0.335.
XRP Daily Chart
After crossing for seven weeks in an ascending channel (white), the sellers took over the trend to cause a strong pullback on the chart. The $0.39 level turned out to be an 11-week high resistance level.
As the supply zone tightened buying power, the altcoin marked a reversal below its EMA ribbons. The press time bearish pennant setup appeared to propel a breakout, which retested the $0.33 baseline.
Bears may look to exploit weaknesses in this region, especially with the widening gap between the south-facing 20 and 50 EMA.
A potential rebound from the $0.33 support could position XRP to retest the $0.35 area. However, a possible close below this support level would only add to the downside pressure in the coming sessions.
To top it off, recent sell volumes were well above buy orders. The bulls need to re-enter the $0.33 level to avoid an immediate pushback towards the $0.32 area.
The Relative Strength Index (RSI) has maintained its position well below the middle line for the past ten days. An eventual close above the 38 resistance may reaffirm the ease of increased selling pressure.
Also, the Chaikin Money Flow (CMF) marked higher lows to depict a rather mild bullish divergence with the price. A jump above the zero level could revive a slight increase in buying volumes. Additionally, the DMI lines maintained their bullish stance, but the ADX projected a weak directional trend.
Given the bearish reversal of XRP on the EMA ribbons, as well as low buying volumes, the bears would be looking to continue their frenzy in the coming sessions. However, divergence on the CMF could propel near-term growth before giving way to long-term bearish inclinations. In both cases, the objectives would remain the same as those discussed.
Additionally, keeping an eye on Bitcoin’s movement and broader sentiment would be important in determining the chances of a bullish invalidation.