The Ripple Effect of Legal Victory
Recently, an XRP enthusiast excitedly exclaimed on social media, “You’re not bullish enough!” This outburst followed the announcement that the U.S. Securities and Exchange Commission (SEC) has dropped its long-standing case against Ripple, the company that utilizes XRP for cross-border transactions. This news has undoubtedly ignited a wave of enthusiasm among investors, as the end of this legal battle has lifted a significant burden that had previously weighed down XRP’s performance, especially during the bullish market of 2021. Additionally, the growing hype surrounding potential XRP Exchange-Traded Funds (ETFs) and hopes that XRP could be integrated into the U.S. strategic reserve have further fueled optimism.
However, despite this positive sentiment, recent price movements tell a different story. Key technical indicators are flashing warning signs, suggesting that XRP may be on the verge of a notable price decline.
Price Action: A Mixed Bag
Following the SEC’s announcement, XRP experienced a significant surge, climbing over 11% to reach $2.59. However, since that high, the price has struggled to maintain momentum, remaining trapped in a range between $2.30 and $2.50. This stagnation persists despite optimism that potential trade tariffs from President Donald Trump could be more favorable than initially anticipated.
Bearish Signals from Technical Indicators
Three-Line Break Chart Analysis
One of the first indicators suggesting a bearish trend reversal is the three-line break chart, a tool that focuses solely on price movements while filtering out short-term fluctuations. This chart is composed of vertical bars, colored green for bullish movements and red for bearish movements. A bullish reversal occurs when a green bar forms above the highest point of the last three red bars, while a bearish shift is indicated by a red bar that drops below the lowest point of the previous three green bars.
In XRP’s case, a new red bar emerged earlier this month, signaling a bearish shift in momentum that has remained intact despite the positive SEC news. This weekly timeframe means that the chart aggregates price data over a week, emphasizing the significance of this shift.
MACD and Weakening Trends
The Moving Average Convergence Divergence (MACD) histogram, commonly used to assess trend strength and transitions, is now displaying deeper bars below the zero line on the weekly chart. This shift indicates a strengthening downside momentum. Notably, the MACD had turned positive in November, which preceded a price surge from $1 to above $3.
Additionally, the 5- and 10-week simple moving averages (SMAs) have crossed into bearish territory, reinforcing the sentiment that the path of least resistance is downward at this time.
Bollinger Bands: A Volatility Perspective
Bollinger Bands, which represent volatility and are positioned two standard deviations above and below XRP’s 20-week SMA, have recently widened in response to the sharp price rally observed in late 2024 and early this year. Historically, after such significant widening, prices have often followed a downward trend, as seen in mid-2021 and early 2018.
What’s Next for XRP?
To shift the current bearish sentiment, XRP must make a decisive move above the $3 mark, which was the high reached on March 2. Such a breakthrough would invalidate the bearish setup and indicate a potential shift toward a more bullish technical outlook. Some analysts even speculate that XRP could reach as high as $10 by the end of this decade, but this rally hinges on overcoming current technical challenges.
Conclusion
While the news surrounding Ripple and XRP has generated considerable excitement, the prevailing technical indicators suggest that caution may be warranted. Investors will be closely monitoring key price levels, particularly the $3 threshold, to determine whether XRP can regain bullish momentum in the coming weeks.
