XRP Sees Long Position Chasing and Sharp Reversal; Here’s what might happen next

Warning: The information provided does not constitute financial, investment, trading or other types of advice and is solely the opinion of the author

  • XRP daily time frame chart has been bearish since late October
  • The formation of the range at the beginning of November was respected, but another wave of sales is expected

XRP has been trading in a range after the sell-off during the FTX saga. Lows in this range have again provided support in recent days, but the rally is likely to provide another opportunity for sellers.

Read XRP Price Proposition 2023-24

Bitcoin has been very quiet in recent days. A breakout towards $18.2k or higher for bitcoin could trigger a change in sentiment across the altcoin market. Even then, it remained potentially profitable to short any bounce in price.

The liquidation of long positions was followed by a reversal, but demand was not strong

Source: XRP / USDT on TradingView

XRP’s market structure turned bearish when the price dropped below the mid-range mark at $0.37 on December 16. Since then, the price has tested the lower bands at $0.333 as support and rebounded back to $0.37.

This rebound saw XRP forming a bearish order block, which is an area dominated by sellers. Combined with the bearish market structure on the daily time frame, it indicates that a return to this resistance area is likely to face rejection again.

Therefore, short sellers can look to enter near the $0.362-$0.37 area. Stop loss can be set near USD 0.375, as a move above USD 0.374 would invalidate the bearish notion. Traders can also look to manually close the trade on the daily close above $0.373, giving more room for bullish volatility.

To the south, downside targets include $0.333 and $0.3 for the ambitious bears.

Both long and short positions were liquidated while open interest decreased

XRP Sees Chasing Long Positions And A Sharp Reversal - Here's What Could Happen Next

Source: Coinalyze

Over the past few days, XRP witnessed a violent downward movement that quickly reversed. This may be a search for liquidity before a strong rally. Therefore, the bears must moderate their enthusiasm.

Coinalyze data showed $2.4 million worth of long positions liquidated within an hour on January 2, when the price fell to $0.3 before quickly rebounding to $0.353 just 14 hours later.

Open interest graphs showed a significant decrease in OI, indicating disappointed or liquidated long positions. This downward trend has been confirmed. The price and OI need to stabilize for a while before the bulls can expect an upward move.

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