XRP Technicals Warn of Potential Drop to $2 if $2.70 Support Falters
XRP (XRP) price has continued to decline following last week’s sharp sell-off. As of Monday, the altcoin’s price has decreased by 1.78% over the past 24 hours, bringing it to $2.78.
A risk-off sentiment is prevailing in the larger crypto market, and a decrease in on-chain activity indicates that XRP may remain trapped in a downtrend in the coming week or two. Nevertheless, a reversal could occur if crucial support levels are maintained.
The Crypto Fear & Greed Index has fallen into the “fear” zone at 46, down from the “neutral” levels observed last week and “greed” levels seen 30 days ago, reflecting increased caution among investors, according to data from Alternative.me.
This sentiment of fear is mirrored in declining on-chain activity, as the number of active addresses has dropped significantly in recent weeks, down to roughly 19,250 on Monday from 50,000 in mid-July.
The Active Addresses metric tracks the number of wallets actively engaging with the XRP Ledger (XRPL) by sending or receiving XRP. Hence, such a considerable decline signals a lower risk appetite, making XRP more susceptible to sell pressure.
Moreover, less investor interest is highlighted by a notable decrease in futures open interest (OI), which has fallen to $7.7 billion from $10.94 billion during the same timeframe.
This decline in OI suggests a lack of investor conviction, potentially heightening the chance of the downtrend persisting in the short term.
Despite weak fundamentals, the technical landscape indicates a potential rebound if the support at $2.70 holds. On the other hand, a prolonged decline towards $2 could occur.
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The XRP price chart has been forming a descending triangle pattern on its daily chart since its rally to a multi-year peak of $3.66 in July, characterized by a flat support line and a downward-sloping resistance line.
A descending triangle pattern that emerges following a robust uptrend is typically viewed as a bearish reversal signal. Generally, this pattern resolves when the price dips beneath the flat support level, potentially dropping by as much as the triangle’s maximum height.
The bulls are finding it challenging to keep XRP above the triangle’s support line at $2.70. Should they succeed, the price might rise to surpass the upper trendline at $3.09, which aligns with the 50-day simple moving average (SMA) and the 0.618 Fibonacci retracement level.
This would confirm bullish momentum and could trigger a rally toward the apex of the existing chart pattern around $3.70.
Conversely, if $2.70 is lost, it may signal another sell-off, with the first defense line provided by the demand zone between $2.6 (the 100-day SMA) and $2.48 (the 200-day SMA).
If this level is breached, XRP price could potentially fall toward a downside target of approximately $2.08 in the coming weeks, representing a 25% drop from current price levels.
The liquidation heatmap indicates that XRP buyers are active at $2.70, while considerable clusters of ask orders are positioned between $2.87 and $3.74.
As reported, XRP’s Moving Average Convergence Divergence (MACD) suggests a potential bearish crossover in September, raising the risk of a drop to $2.17.
This article does not offer investment advice or recommendations. All investment and trading activities involve risk, and readers should perform their own research before making any decisions.
