XRP has made remarkable gains in recent weeks, despite being a top-10 crypto asset in terms of market capitalisation. The nearly 65% gains it has achieved since the September lows came at a time when Bitcoin [BTC] lacked a strong trend.
The number of new addresses on the network has recently increased, lending credence to the notion that XRP is in high demand. XRP has been one of the market’s larger outliers during a period when many assets lacked an uptrend or were in a longer-term downtrend. Was this too good to be true, or will XRP be able to break through the resistance above?
Fibonacci extension level sets up an ambitious target for bulls
Source: XRP/USDT on TradingView
In September, the price broke out of a nearly four-month range that extended from $0.31 to $0.42. Toward the end of September, the $0.42 level was retested as support, and XRP saw a strong bounce to reach $0.5.
This showed that the former range highs were flipped to support. The On-Balance Volume (OBV) has also seen remarkable gains in recent weeks, highlighting heavy buying pressure behind XRP.
The Fibonacci extension levels (yellow) presented a bullish target of $0.61 and $0.71 for XRP. If XRP could climb above $0.56, there was a good chance that the rally could continue. This could see the price rise as high as $0.71.
The Relative Strength Index (RSI) formed a bearish divergence, and this could be followed a pullback. The $0.5 and $0.465 retracement levels can be used to buy XRP. A session close below $0.435 would flip the structure to bearish.
The aforementioned bearish divergence could be followed by a hidden bullish divergence. Traders can use such a development, alongside a retest of the aforementioned support levels, to look for opportunities to long the asset.
Has MVRV found a long-term bottom in June?
Source: Santiment
In late June, the MVRV Ratio (365d) fell to the lowest level in nearly 18 months. Since then, the ratio slowly began to rise higher even though XRP itself was stuck in a range. Santiment data showed that going as far back as 2015, these same lows have not been breached on the MVRV. Yet, we can not conclude that XRP has formed a long-term bottom in recent months.
The funding rate ticked into positive territory in October as the futures market flipped from bearish to bullishly biased.
The breakout from the range highs at $0.42 had strong demand behind it. The rally could continue higher to reach $0.58 and $0.71. The $0.7-$0.76 was a strong zone of resistance where a rally could fizzle out. Risk-averse traders can look for a retest of the $0.48-$0.44 area to load their bags.
