Recent volatility has seen Ripple (XRP) experience a significant price correction, prompting traders to re-evaluate its market position. Following a broader market downturn, XRP dipped, triggering substantial liquidations, yet this very dip is now seen by some analysts as a potential 'buy the sell-off' opportunity within a critical demand zone. The interplay of bearish short-term indicators and long-term support structures creates a complex but potentially lucrative scenario for astute investors.
Decoding the Downturn and Bearish Signals
XRP witnessed a 4.62% decline over 24 hours, directly impacted by Bitcoin's fall, leading to over $40 million in liquidations, predominantly from long positions. While the weekly timeframe shows a bullish swing structure, the internal market dynamics appear bearish. Key indicators such as the On-Balance Volume (OBV) have been trending downwards since September, and the Moving Average Convergence Divergence (MACD) remains below the zero line, signaling firm downward momentum. This suggests bears currently hold the upper hand, especially as XRP trades below the 78.6% Fibonacci retracement level.
Identifying Key Support and Potential Reversal
Despite the prevailing bearish momentum, XRP has retested a crucial demand zone, identified between $1.96-$2.0, which has historically served as strong support for bulls. This area is further reinforced by a broader year-long demand zone that XRP has successfully defended since December 2024. The recent flurry of liquidations is interpreted by some as a potential liquidity sweep, a market mechanism that often precedes a local bottom and sets the stage for a rebound by clearing out overleveraged positions. This makes the current levels an attractive prospect for buyers seeking relatively low-risk entry points with higher reward potential.
A Strategic Path Forward for Traders
For traders looking to capitalize on the potential reversal, a strategic buying range has been identified between $1.90-$2.01, aligning with Fibonacci retracement levels and historical support. A drop below $1.81 would serve as an early warning sign for bulls, with a session close below $1.77 invalidating the bullish setup entirely. Should XRP find support and initiate a rally, initial take-profit targets are set between $2.30-$2.40, with extended targets around $2.55-$2.60. Bitcoin's performance at key resistance levels of $101k and $107.5k will also be crucial in shaping broader market sentiment and XRP's trajectory.
