XRP (XRP) was trading around $1.41 as of November 27, down more than 17% in four days after reaching a multi-year high of around $1.63. However, on a monthly basis, the cryptocurrency’s “Trump Trade” profits increased nearly 180% in its best month since April 2021.
Overbought XRP signals 25% decline by December.
XRP’s Relative Strength Index (RSI) levels have remained above 70 on the daily chart throughout November, indicating that the ongoing uptrend is likely to run out.
Historical data highlights XRP’s tendency to correct sharply after reaching overbought RSI levels. For example, in June 2023, XRP’s daily RSI topped 85 while rising to $0.82, after which the price fell 46.5% to bottom at $0.43 in less than two months.
Likewise, after RSI crossed 70 in November 2023, XRP fell 33.6% over the next few weeks, retreating from $0.65 to $0.43.
XRP/USD daily price chart. Source: TradingView
The current price level is also consistent with the Fibonacci retracement extension. XRP’s recent breakout surpassed the 2.618 Fibonacci extension near $1.09, which is currently proving to be a strong resistance level and has raised the possibility that XRP will fall towards the $1 level by December, matching the 1.618 Fibonacci extension.
If a correction occurs, the $1 psychological level could act as a short-term bottom. However, a deeper decline could see the 50-day exponential moving average (EMA) revisit near $0.85, matching the previous Fibonacci support level.
Interestingly, the correction in XRP coincides with a slight decrease in supply for the wealthiest investors, namely those holding more than 100,000 tokens.
Supply XRP to addresses with a balance of 100,000 or more tokens. Source: Messari
A decline in whale holdings may indicate a transition from an accumulation phase to a distribution phase. Whales often accumulate tokens during periods of consolidation or low volatility. When prices soar, they distribute their holdings to retail buyers chasing the rise.
XRP long-term indicators suggest bullish momentum.
Switching to the weekly price chart, we can see that XRP is in a long-term uptrend phase after breaking out of a giant symmetrical triangle pattern.
In particular, XRP broke out of its triangle pattern for the first time in seven years in late October. This technical move is similar to similar breakouts that preceded XRP’s historic 43,650% rise in 2017-2018.
XRP/USD 6 week price performance. Source: TradingView
The current breakout also displays similar fractal behavior, with XRP reclaiming a key level from the 0.5 Fibonacci retracement (~$1.78) and now targeting an extension higher.
If the fractal is true, XRP could retest its 2018 highs near $3.41, while longer-term forecasts could target $13.93, the 4.236 level.
Fundamentals support a long-term bull market.
For example, Donald Trump’s re-election could help end the long-running SEC vs. Ripple war. Additionally, Ripple’s recent partnership with UK-based FCA regulated digital asset exchange Archax to launch a tokenized money market fund on the XRP Ledger could further drive XRP adoption.
relevant: Ripple invests in rebranded Bitwise XRP ETP
However, the 6-week RSI has risen to 70, a threshold that historically precedes a short-term correction or sideways period. A downtrend to retest the triangle’s upper trendline, currently near $1.00, cannot be ruled out. The $1 target is consistent with the daily chart analysis above.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.