In a potentially troubling scenario, XRP could face a significant downturn of up to 25%. This prediction stems mainly from its current overbought state, a situation that has historically preceded sharp price declines.
Market Activity and RSI Analysis
After reaching a peak of about $1.63—its highest level in years—XRP has dropped over 17%, settling at approximately $1.41 as of November 27. Despite this recent setback, the cryptocurrency enjoyed remarkable success throughout November, soaring nearly 180% and marking its best performance since April 2021.
Throughout the month, XRP’s relative strength index (RSI) has remained notably high, consistently surpassing 70 on daily charts. This elevated RSI suggests that bullish momentum might be waning. Historical trends indicate that XRP often undergoes significant corrections when its RSI enters the overbought territory. For example, in mid-2023, the RSI jumped above 85 amid a surge to $0.82, followed by a steep drop of 46.5% over the next couple of months, ultimately bringing prices down to $0.43.
A similar pattern occurred in November 2023. After the RSI spiked above 70, XRP experienced a drop of 33.6%, falling from $0.65 to $0.43 in the ensuing weeks.
The current price activity also aligns with Fibonacci retracement levels. XRP recently surpassed the 2.618 Fibonacci extension at roughly $1.09, which has now become critical resistance. Analysts speculate that a correction may send XRP down towards the $1 mark, coinciding with the 1.618 Fibonacci extension, expected by December.
Should such a correction materialize, the psychological threshold around $1 could act as a temporary support. However, if the pullback is more severe, XRP may revisit the 50-day exponential moving average (EMA), which is currently hovering near $0.85 and aligns with prior Fibonacci support levels.
Investor Behavior and Market Trends
Adding to the narrative, XRP’s downward price movement coincides with a slight reduction in holdings among major investors—specifically, those with over 100,000 tokens. This decrease in accumulation by these “whales” could indicate a shift from buying behavior to selling as market conditions fluctuate. Typically, these large holders accumulate during steady periods and tend to sell during price surges when retail investors jump on the bandwagon.
Looking at the weekly price chart, XRP seems to be experiencing a long-term bullish trend. It recently broke free from a significant symmetrical triangle pattern, an event not seen in seven years. This breakout brings to mind the previous surge that led to an astonishing 43,650% increase between 2017 and 2018.
Current market fluctuations reveal fractal patterns; XRP has regained vital levels at the 0.5 Fibonacci retracement (around $1.78) and is now targeting further extensions. If this fractal behavior continues, XRP could potentially revisit its all-time high of about $3.41 reached in 2018, with long-range targets soaring as high as $13.93, according to the 4.236 Fibonacci level.
On the fundamental side, factors are converging to support a sustained bull market. The possible reelection of Donald Trump could bring closure to the lengthy legal battles between Ripple and the SEC. Additionally, Ripple’s recent partnership with FCA-regulated UK digital asset exchange Archax, aimed at launching a tokenized money market fund on the XRP Ledger, could pave the way for broader XRP adoption.
Short-Term Predictions and Outlook
That said, the 6-week RSI has also reached 70, a level that often foreshadows short-term corrections or phases of consolidation. The likelihood of a pullback to retest the triangle’s upper trendline, which is currently near the $1 mark, remains plausible and aligns with the insights indicated by the daily chart analysis.
Source: Cointelegraph
