Rollercoaster Start to Week for XRP as Recent Ranges Broken

Ripple (XRP/USD) has seen a spike in volatility over the last 24 hours. In the early hours of Monday, XRP surged from under $0.85 per token to as high as $0.91. That near 10% move in a matter of hours took the cryptocurrency to its highest level in about a week and a half and marked a decisive break to the north of recent $0.76-0.85ish ranges and the 200-day moving average at $0.86.

The surge higher seems to have coincided with a surge in social median interest in the cryptocurrency that might have been triggered by news on Sunday that the small Pacific Island nation Palau had announced a partnership with Ripple. According to the President of Palau, “the first phase of the partnership will focus on a cross-border payments strategy and exploring options to create a national digital currency, providing the citizens of Palau with greater financial access”.

But just as quickly as the rally happened, it has now faded. XRP/USD is back under the $0.85 mark and trading roughly in line with its weekend ranges around $0.83. The cryptocurrency’s retracement lower appears to be a function of a broader deterioration in not just cryptocurrency, but also broader financial markets.

For reference, according to CoinMarketCap, the aggregate market capitalisation of cryptocurrencies is down about 3.5% over the last 24 hours to about $2.13T. For Ripple, though it is flat on the day, its market capitalisation is a $4B down from overnight highs above $43B.

XRP Back With Weekend Trend Channel

Prior to the early Monday breakout, XRP/USD had formed a short-term upwards trend channel over the weekend. The recent sell-off has seen XRP drop all the way back to test the bottom of this trend channel. For now, the uptrend is offering support, but should it go, the door could be opened to a drop all the way back to a test of last Wednesday and Friday’s lows in the $0.77 area.

Long-term Momentum Looking Healthier

Even if XRP/USD does slide back to test the Wednesday/Friday lows of last week, that would not represent anything more than a short-term setback for the price action. XRP/USD would remain within recent ranges that have prevailed over the last few weeks and long-term indicators of momentum look positive.

Firstly, midway though last week, the 12-day exponential moving average (EMA) moving back to the north of the 26-day EMA, sending the Moving Average Convergence Divergence (MACD) indicator back into positive territory for the first time since mid-November. In the past months, this has been a good indicator of XRP positive momentum.

Secondly, after falling into oversold territory at the start of the month when cryptocurrency markets experienced a sharp weekend crash (and XRP/USD fell as low as $0.60 per token), the Relative Strength Index has been trending higher and recently moved back above 40.0. XRP being overbought is, thus, not even part of the conversation right now, a factor which could entice some near-term buyers.

It is also notable that over the weekend, XRP/USD edged above a downtrend that had been capping the price action since mid-November. Whether XRP can overcome broader crypto and financial market volatility and push on towards the $1.0 level and recent highs in the $1.25 area remains to be seen.