XRP has recently seen impressive gains, resulting in this altcoin overthrowing USDT to claim the title of the third-largest cryptocurrency in the world. With a market capitalization of this altcoin reaching $154 billion, XRP is currently only half the valuation of Ethereum.
However, despite the optimistic sentiment, the bullish trend still lacks sufficient strength, and this altcoin is currently approaching overbought conditions. If the upward momentum continues, XRP could replicate the strong price action seen in 2024.
XRP market signals have yet to strengthen
XRP's Relative Strength Index (RSI) is currently at 69.23, just below the critical threshold of 70.0 signaling overbought conditions. Historically, when an asset enters the overbought zone, prices often reverse as momentum weakens.
However, in November 2024, XRP defied typical patterns by continuing its price rally despite entering similar overbought conditions.
This sets up a scenario where XRP could repeat history if the upward momentum continues. The price does not reverse in November 2024, instead rising sharply despite reaching the overbought zone.
For XRP to replicate its performance in 2024, the current bullish trend must gather more strength. The Average Directional Index (ADX) is currently just below the 25.0 threshold, which is a crucial level to confirm the strength of the bullish trend. If XRP's ADX surpasses this level, it will signal that the upward momentum is strengthening and could sustain the current rally.
Previously, when XRP experienced a similar situation in November 2024, the ADX also indicated that momentum was increasing. This strength allowed XRP to overcome resistance levels and climb higher, even when the asset was considered overbought. Therefore, the ADX could play a crucial role in determining whether XRP can successfully replicate its previous success.
XRP could reach $3
XRP is currently trading at $2.58, up 21% in the past week. This altcoin has broken through the resistance level of $2.56 but has yet to hold this level as support. If it maintains this level, XRP could continue the upward trend.
With $3.00 now within reach, XRP is aiming to break the next barrier at $2.95. If XRP surpasses this level, it could push the price up to $3.00, repeating the historical volatility seen before. However, without sufficient strength in the bullish trend, XRP could fall back into an overbought state, leading to a price reversal.
In the event of a recession, XRP could face a drop below $2.56, leading to a potential decrease to $2.27. If this occurs, it would invalidate the current bullish thesis, signaling the potential end of the rally. The ability to maintain market strength in the near future will be crucial in determining XRP's price trajectory.