XRP is trading near a price of $1.99, which is about a 1% decrease over the last 24 hours. While the entire market has experienced significant volatility, the price of XRP is only about 4% lower over the week, indicating relative stability compared to many altcoins like ADA and BCH.
More importantly, the chart shows an early bullish trend reversal signal. The pattern has not yet been confirmed, but if one key level holds, the probability of a short-term retracement of at least 9% increases significantly.
Bullish divergence occurs when the price of XRP defends a key support level.
A bullish divergence has formed for XRP on the daily chart from December 1 to December 14. Bullish divergence occurs when the price makes a lower low, but the Relative Strength Index (RSI) makes a higher low. RSI is a metric that measures the strength of buying and selling. When RSI strengthens while the price weakens, it often indicates a waning of selling pressure.
The classic bullish divergence on the daily chart can lead to a trend reversal — from down to up.
However, mere divergence is not sufficient; it is significant only if the price of XRP remains at support.
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Support is located near the price of $1.97. XRP has repeatedly defended this area, and chain data helps explain why.
The cost basis heat map shows a dense cluster of XRP purchases in the range of $1.97–$1.98.
Approximately 1.79 billion XRP was gathered in the area. The cost basis heat map shows where the largest groups of holders have bought their coins. When the price moves at these levels, holders are unlikely to sell at a loss, which reinforces support.
As long as XRP stays above $1.97, the bullish divergence idea remains valid, provided the RSI reading also remains strong.
Why $2.17 is the first real test for bulls.
If support holds, XRP has room to rise higher. The first target level is around $2.17, which means approximately a 9% increase from the current price.
This level is crucial because there is abundant supply shown in the cost basis heat map in the range of $2.16–$2.17. Approximately 1.36 billion XRP has been acquired from this area. Thus, it is a strong resistance zone where selling pressure is likely to increase.
If the XRP price breaks above $2.17 and the daily candle closes above it, the opportunity to rise towards $2.28, then $2.69, and finally $3.10 opens up. However, these levels are secondary and depend on broader market conditions.
Invalidation is clear. A daily close below $1.97 would weaken the reversal setup and potentially expose the price to slide towards $1.81 and $1.77.
Currently, the price of XRP is at a critical moment. The signal for a bullish trend reversal is active, but only if the main support level holds in the future.
