XRP (XRP) just climbed above a key resistance level in a lower time frame, as the market seems to be ready to step out of bearish territory and resume its uptrend.
No economic data points that are relevant to the crypto market will be released in the next few days, which could give the price action increased relevance over XRP’s performance at a point when it just bounced off the $1.26 support.
Trading volumes picked up during today’s American session, hitting $1.7 billion after a few days of stalled activity.
Lately, the market’s interest in this altcoin faded as the Trump administration in the United States exhausted most of its resources to push forward a supportive regulatory framework for cryptos.
Following a strong jump that catapulted XRP from $1 to $1.60 in just a couple of months, a pullback was necessary to unlock lower demand zones where late buyers could step in and kick off the next leg up.
Trading Volumes Decline as Traders Shun XRP Following Failed Clarity Act Vote
Data from Santiment shows how a bullish crossover between the 7-day and 200-day moving average for volumes has typically marked the beginning of strong price moves. However, we just got a bearish crossover after the initial late-August spike.
Back then, the U.S. Securities and Exchange Commission (SEC) released its latest “Regulation Crypto Assets” framework, and the market greeted the news with a strong jump in the price of all cryptocurrencies.
However, following the failed vote on the Clarity Act, projects like XRP, which relied on that legislation to accelerate adoption in the United States, now have limited capabilities to enter this market and push products like Ripple USD (RLUSD) forward.
XRP’s poor performance on a year-to-date (YTD) basis also reflects this. The token has lagged behind Solana (SOL) and Ethereum (ETH), two of its strongest competitors, during this period, with losses that are 10% higher than the latter.
Moreover, net inflows to exchange-traded funds (ETFs) linked to the token also provide evidence of this bearish momentum, as XRP has seen a downtrend in the past couple of months, while Solana ETFs behave in the opposite direction.
What we need right now is another bullish crossover between these two moving averages for volumes, as this could provide additional confirmation that the rally will soon resume.
Ripple Price Forecast
Every new Ripple analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Ripple forecastsXRP Could Revisit $1 Unless It Breaks This Key Resistance Soon
Turning to the 4-hour chart, the $1.26 area acted as a strong demand zone for the token once again on Sunday. We see this level as the last line of defense for bulls. Meanwhile, we were waiting for a breakout above $1.31 to confirm that a trend reversal has begun.
This happened during the American session today, and could mark the beginning of a progressive recovery toward our short-term target of $1.55.
Even though the price has kept making lower lows, the Relative Strength Index (RSI) has been stalled above 30. This was also an early indication of a bullish divergence and further confirms that XRP has already found a footing to resume its rally.
A progressive short squeeze may help XRP gain territory in the next few days, as bearish positions have kept accumulating in the past few days. That said, if we lose the $1.25 area for some reason, brace for a deeper correction, as that would invalidate this bullish scenario.
