Why the XRP/USD 50-week EMA is vital
On Feb. 13, XRP/USD reached as excessive as $0.916, above its 50-week exponential transferring common (50-week EMA; the pink wave) round $0.833. The upside transfer, albeit not decisive, opened prospects for additional bullish momentum, primarily owing to a historic shopping for sentiment across the mentioned wave.
For example, merchants had efficiently reclaimed the 50-week EMA as help within the week ending July 27, 2020, greater than a 12 months after flipping the wave as resistance. Later, XRP’s worth rallied by greater than 820% to $1.98 in April 2021, its greatest degree in additional than three years.
Conversely, through the bearish cycles between 2018 and 2020, XRP’s 50-week EMA acted as a powerful resistance degree on a number of events. That confirmed the wave’s skill to face up to bullish restoration sentiments, such because the one witnessed through the present worth rebound.
Can XRP retake $1?
XRP now wants to carry decisively above its 50-week EMA, which may have it reclaim $1 within the periods forward.
The extent, which sits round 25% above the present worth ranges, coincides with XRP’s two key resistance targets. The primary is the multi-month downward sloping trendline that has been capping the token’s upside bias since April 2021
In the meantime, the second goal is the 0.382 Fib line of the Fibonacci retracement degree drawn between $2.70-swing excessive and $0.10-swing low, additionally having a historical past of limiting XRP’s sturdy traits by performing as each help and resistance.
Nonetheless a decrease excessive, the $1-level doesn’t promise to take XRP out of its correction bias. As a substitute, it might convey alternatives for merchants to safe their interim earnings, thus exposing XRP to a pullback towards an imminent help goal close to $0.71, as per the Fibonacci retracement graph.
The bears’ case
Conversely, failure to acquire a decisive shut above the 50-week EMA resistance may have XRP eye a pullback towards its 200-week EMA (the blue wave) close to $0.54.
This transfer dangers trapping the worth inside a spread outlined by 50-week EMA as resistance and 200-week EMA as help, which can end in an additional breakout to the draw back. The bearish outlook seems out of a fractal from June 2018-June 2019 session, as proven within the chart beneath.
Notably, XRP’s run-up to its file excessive of $3.55 in January 2018 coincided with its weekly relative power index (RSI), forming a decrease excessive, thus confirming a bearish divergence.
Later, the worth declined beneath its 50-week EMA however picked help from its 200-week EMA. The RSI’s fall additionally exhausted close to 37, simply above its oversold studying of 30.
XRP trended sideways contained in the mentioned transferring common vary, whereas the RSI maintained a studying above 37. Nonetheless, in June 2019, the worth broke beneath the 200-day EMA help, extending its decline to as little as $0.10 as of March 2020.
If the fractal performs out because it did in 2018-2019, XRP would threat breaking beneath its 200-week EMA help close to $0.54 within the coming periods. Such a transfer could shift XRP’s interim draw back goal to the 0.786 Fib line close to $0.43, based on the Fibonacci retracement graph painted from $0.14-swing low to $1.52-swing excessive.
In the meantime, an additional break beneath $0.43 would put the subsequent draw back goal at $0.22, a degree with a historical past of high-volume buying and selling exercise.
The views and opinions expressed listed below are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails threat, you need to conduct your personal analysis when making a call.