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After the market crash that sent the Bitcoin price falling toward $100,000, the XRP price also saw a notable decline, and this crash has brought it toward an important level. While the digital asset continues to hold above the $2.1 level, it remains critical support and a break below this could be negative for the price. This is outlined by crypto analyst The Alchemist Trader, who has shown what direction the XRP price could be headed in depending on what happens here.
XRP Price Threatens Major Support Level
After the almost 4.5% decline that ravaged the XRP price over the last week, it has been pushed down toward the next major support level, lying just above $2.09. So far, the bulls have defended this level, but the multiple tests suggest that a breakdown at this level could be in view.
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The analyst explains that the reason this level is so important is that it actually includes the value area low recorded in previous declines. Additionally, it is the 200-day moving average (MA) for the cryptocurrency, and also now serves as a key daily support/resistance flip. This means either camp of the bulls and bears can pull it in their direction, making it incredibly important for what happens to the XRP price in the short term.
Given the importance of this level, whether it holds or breaks will carry serious implications for the XRP price. In the bearish scenario, the crypto analyst explains that a break below this support would trigger a liquidity sweep as the price dumps lower.
The possibility of a break is even higher now, given that this level has already been tested multiple times. The Alchemist explains that each test weakens the level, putting it at risk of a breakdown. However, with long consolidation so far above this level, there is a bullish scenario that is rising.
As bulls continue to maintain this support, further strength here could erode the possibility of a decline. If properly defended with a notable uptick in volume, in addition to a move upward into the recent local highs at $2.4, then it is likely that the XRP price continues to move up.
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“For bulls, a clean defense of this level with volume and a move back above recent local highs would indicate a potential rotation toward the next resistance,” the analysis read. “For bears, a breakdown without a reclaim increases the likelihood of continuation to the downside.”
As for how to play the current trend, the analyst advises investors to exercise caution and wait for confirmation before taking positions. The confirmation here would either be a break below the support or a strong upward rally away from it, signaling a clear direction.
Featured image from Dall.E, chart from TradingView.com
Read the full article here
