Ripple blockchain’s native cryptocurrency XRP hit its seven-week high during Wednesday trade.
The gains came as a part of a broader cryptocurrency market uptrend that saw every high-cap token painting fresh local highs.
But XRP’s interim uptrend could run out of breath as price tests a strong technical resistance.
XRP, the cryptocurrency that finds use in Ripple’s blockchain payment protocol, was trading higher during Wednesday’s trading session.
The fourth-largest crypto token surged 8.26 percent into the day to hit a seven-week high at $0.231. Its move uphill brought its net rebound up by 103 percent, more than a month after the price fell to the year-to-date (YTD) low near 0.114. At its highest in 2020, XRP was trading at $0.346.
Driving Under Influence
XRP wasn’t the only cryptocurrency registering gains. Its strong performance was reflected in the rest of the cryptocurrency market.
After the epic crash in March, all the coins rebounded to negate their losses, with Bitcoin, Ethereum, Binance, EOS, and many others making a full retrace.
So it appears, price rallies in the altcoin market tailed optimistic sentiments in the Bitcoin market. The benchmark cryptocurrency, BTC, will go through a scheduled block reward halving event, wherein its daily mining reward will go down by half from 1,800 coins per day to 900. Traders believe higher scarcity could make bitcoin more valuable.
Correlation chart between different leading crypto tokens | Source: CryptoWatch
XRP has a moderately positive correlation with Bitcoin – ticking at 0.80 on a 30D timeframe, according to data available at CryptoWatch. It shows that the Ripple crypto’s gains merely tailed the halving optimism in the Bitcoin market – and may continue to do so heading further into the second quarter of 2020.
Big Ripple Pullback
Reading of Ripple’s daily charts, on the other hand, shows a cautious price outlook. The XRP’s daily Relative Strength Indicator (RSI) represents it as an overbought asset, noting that its price is way out of its neutral zone and, therefore, must correct lower. Meanwhile, another technical fractal somewhat says the same thing.
XRPUSD near key technical resistance, awaiting pullback | Source: TradingView.com, BitStamp
The XRPUSD exchange rate is trending upwards in an Ascending Channel, now testing its Resistance trendline for an interim pullback. Meanwhile, the resistance coincides with the 0.23% Fibonacci retracement level of the graph drawn from $0.346-highs to 0.114-lows.
Coupling both the indicators with Ripple’s daily RSI readings raises the possibilities of its price heading lower in the coming sessions. Ideally, it would retest the Channel support that falls alongside the 38.2% Fibonacci retracement level – at $0.20.
A pullback does not take Ripple out of its bullish bias but creates opportunities for new traders to enter the market. Therefore, the Ripple price may bounce back – also owing to its positive correlation with a bullish Bitcoin. A higher low formation, as noted trader Michaël van de Poppe thinks, could lead XRP to its YTD high.
Photo by Kupono Kuwamura on Unsplash