Potential for Short-Term Gains, But Bearish Reversal Hints at Correction Ahead
XRP’s price has seen a sharp increase today, rallying by over 20% in the last 24 hours to reach $2.36 on 21 December. The surge follows reports of Ripple’s planned $5 million donation in XRP to US President-elect Donald Trump’s inaugural committee.
Ripple’s $5 Million Donation
Fox Business was the first to break the news, reporting that Ripple is likely to contribute $5 million to Trump’s inauguration fund. This aligns with previous remarks made by Ripple CEO Brad Garlinghouse, as cited by The New York Times.
Additionally, crypto exchanges Coinbase and Kraken have reportedly donated $1 million each to the same committee.
The donations come as Ripple, Coinbase, and Kraken remain entangled in legal battles with the US Securities and Exchange Commission (SEC). Trump’s re-election has raised hopes for a more crypto-friendly SEC under Paul Atkins, Trump’s nominee for the regulatory body’s leadership. Atkins is known for his pro-crypto stance, boosting market sentiment among XRP holders who see this development as a positive step towards resolving Ripple’s ongoing SEC lawsuit.
Technical Indicators Signal Gains
XRP’s price increase today coincided with critical technical support levels. On the 4-hour chart, the cryptocurrency’s Relative Strength Index (RSI) briefly dipped into oversold territory, falling below 30. This often signals a potential reversal and attracts buyers, leading to upward momentum.
Additionally, XRP found strong support near its 200-period exponential moving average (200-4H EMA) at around $2.00. This area aligns with a key horizontal support zone, historically acting as an accumulation area for buyers.
Bearish Pattern Hints at Correction
Despite the current rally, XRP’s daily chart presents a cautionary tale. The formation of a descending triangle pattern – characterised by a falling trendline resistance and horizontal trendline support – suggests a potential bearish reversal.
Typically, descending triangles that form during an uptrend indicate a breakdown below the horizontal support level. If XRP’s price breaks below this level, it could fall by the maximum height of the triangle. This would place XRP’s downside target for December at approximately $1.77, marking a 22.5% decline from current levels.
The $1.77 target also aligns with XRP’s 50-day EMA, further reinforcing this potential correction.
Upside Potential
On the other hand, a breakout above the descending triangle’s upper trendline could invalidate the bearish outlook. In this scenario, XRP’s price may climb towards $2.90, its December high.
While the recent rally has been driven by positive sentiment around Ripple’s donation and its implications for the SEC lawsuit, traders are advised to monitor key technical levels closely. The price momentum in the coming days will likely determine whether XRP continues its upward trajectory or faces a significant correction.
