Recent market developments are drawing parallels between XRP’s current performance and a trend observed from April to June 2021, which was followed by a substantial 65% price drop in the subsequent months. Despite experiencing double-digit percentage gains this month, with XRP reaching $0.76, there are signs that this bullish momentum may be reaching a saturation point, mirroring the trends seen in other parts of the cryptocurrency market.
The optimism surrounding Ripple’s partial victory against the United States Securities and Exchange Commission had fueled bullish forecasts, with some predicting XRP to soar as high as $15 in the coming months. However, caution is now warranted as fractal analysis of XRP’s recent candlestick and price momentum patterns indicates the possibility of a sharp market correction, particularly if historical patterns repeat.
Certain market signals that were previously observed before the significant price decline in Q2 2021 are once again flashing warning signs. These include the presence of a multiyear descending trendline resistance and an “overbought” relative strength index (RSI). The descending trendline resistance has consistently limited XRP’s upward movements since January 2018, reinforced by another horizontal trendline resistance near $0.93.
Taking these factors into account, the confluence of resistance levels and the overbought RSI now increases the risk of a market correction for XRP. As a result, it is possible that the price may drop towards the lower trendline support at approximately $0.52 by September, representing a decline of almost 40% from the current price levels.
Interestingly, the projected downside target aligns closely with XRP’s 50-week exponential moving average (50-week EMA), denoted by the red wave, which raises the possibility of a potential bounce around this level. Moreover, this wave support previously served as a local bottom during the price decline observed in Q2 2021.
As of July 20, XRP has outperformed the broader cryptocurrency market, recording a month-to-date increase of 70%, while the overall crypto market rose by only 5% during the same period.