XRP handles near $ 1.99, down about 1% over the last 24 hours. Despite broader market volatility, it is only about 4% lower this week, which shows relative stability compared to many altcoins like ADA and BCH.
More importantly, the chart shows an early bullish reversal signal. The setup is not confirmed yet, but if one key level holds, the chance for a short-term increase of at least 9% significantly increases.
Bullish divergence occurs when the XRP price defends an important support level.
XRP has formed a bullish divergence on the daily chart between December 1 and December 14. A bullish divergence occurs when the price reaches a lower low, but the Relative Strength Index (RSI) shows a higher low. The RSI is a momentum indicator that measures buying and selling pressure. When the RSI improves while the price weakens, it often signals that selling pressure is waning.
On the daily chart, a standard bullish divergence like this can lead to a trend reversal – from bearish to bullish.
However, this divergence alone is not enough. It only matters if the XRP price holds the support level.
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This support level is around $ 1.97. XRP has repeatedly defended this zone, and on-chain data helps explain why.
The cost basis heat map shows a tight cluster of XRP purchased between approximately $ 1.97 and $ 1.98.
Approximately 1.79 billion XRP were accumulated in this area. A cost basis heat map shows where large groups of owners have purchased their coins. When the price trades near these levels, it is less likely that owners will sell at a loss, which strengthens the support level.
As long as XRP stays above $ 1.97, the theory of bullish divergence remains valid, provided that the RSI remains strong.
Why $ 2.17 is the first real test for the bulls
If the support level holds, XRP has room to rise further. The first upside target is near $ 2.17, which is about 9% up from today's levels.
This level is important because the cost basis heat map shows a large supply between $ 2.16 and $ 2.17. About 1.36 billion XRP were purchased in this zone. This makes it a strong resistance area, where selling pressure is likely to occur.
If the XRP price breaks through $ 2.17 with a daily close, it could open a path towards $ 2.28, then $ 2.69, and finally $ 3.10. Nevertheless, these levels are currently secondary and depend on broader market conditions.
The invalidation is clear. A daily close below $ 1.97 would weaken the reversal setup and expose downside towards $ 1.81 and $ 1.77.
Currently, the XRP price is at a crossroads. The bullish reversal signal is active, but only if the key support level still holds.
