XRP (XRP) has jumped by 5% in the past 24 hours, following a strong spike in volumes and a confirmed trend reversal.
Trading volumes have gone up by 40% during this period, indicating that the buying pressure is rising.
Meanwhile, short liquidations across the crypto market rose to $247 million in the past day, providing evidence that a short squeeze is progressively unfolding.
The amount of wiped-out short positions has surged to $400 million in the last three days, as most tokens have managed to recover after hitting key support areas.
Setbacks on the Legislative Front Have Prompted Wall Street to Shun XRP
As we reported yesterday, XRP’s strong bounce off $1.26 marked the beginning of its recovery, while a break above the $1.31 area confirmed that the short-term direction of the price trend has shifted from bearish to bullish.
Despite this strong jump, Wall Street’s interest in XRP remains muted amid an unsupportive regulatory and legislative landscape in the United States. This is reflected in a strong decline in net inflows to XRP exchange-traded funds (ETFs).
A failed vote on the Clarity Act put the bill in the freezer for at least a year, shattering the industry’s plans to accelerate the adoption of blockchain technology and products like stablecoins in the country.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) continue to work toward regulating these products and may help mitigate the impact of that failed vote, but a comprehensive piece of legislation for the sector is still desperately needed.
On the macroeconomic front, inflation was hotter than expected in September. However, the odds of a rate hike during this month’s FOMC meeting are fairly low, according to FedWatch.
This could give the market some breathing room to start its recovery, as the next meeting will take place in December.
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See all Ripple forecastsXRP Offers 4.4x Risk-Reward Ratio After Confirmed Trend Reversal
Turning to the charts, the 4-hour chart confirmed a trend reversal as the price rose above $1.31. This was the level from which the last lower high unfolded. Hence, a break above this mark indicates that buyers have overpowered sellers for now.
The nearest target for the token would be the $1.40 area. This would be the key resistance to watch in the near term, as it is the high timeframe reversal level. If the price rises past this mark, we will get fractal confirmation that a bullish recovery has officially commenced.
Positive momentum is also confirming that the price trend has turned bullish, as the Relative Strength Index (RSI) has surged to 66.
In one of our previous XRP price prediction articles, we shared a trading opportunity based on this confirmed trend reversal that currently offers a 4.4x risk-reward ratio if the position stays open until the token hits our short-term target of $1.55.
This thesis would be invalidated if the price breaks its current bullish structure by dropping below the $1.28 area. Otherwise, we may be witnessing the beginning of XRP’s next leg up.