Big Rally or Imminent Correction?

TL;DR

Ripple’s XRP surged 25% in a week, briefly hitting a three-month high of $0.57, and analysts are predicting potential major price increases, citing bullish patterns and historical cycles. Despite the optimism, some indicators suggest a possible near-term correction.

XRP on the move

The cryptocurrency market has headed north over the past few days, with Ripple’s XRP being one of the best performers. Its price has risen roughly 25% on a weekly basis, briefly hitting a three-month high of nearly $0.57 (according to CoinGecko data) a few hours ago.

XRP Price, Source: CoinGecko

Several traders and analysts watched the currency’s progress, speculating that it is poised for further gains in the near future. X user Mikybull Crypto claimed that the rally has “just begun”, adding that the asset may mimic the bull cycle of 2017. Recall that the price of XRP was below $0.01 at the beginning of 2017, while 12 months later, it was close to $2.30 (representing a 38,000% increase).

“Something big is brewing,” Mikybull Crypto concluded.

Crypto Michael also chimed in, arguing that XRP could become “one of the biggest bombs of the year” once it breaks above $0.56. As mentioned above, the valuation surpassed this mark before returning to the current level of around $0.54.

Armando Pantoja was also bullish, envisioning a price explosion towards the astonishing $20. He based the forecast on the recently formed historical pattern on the XRP price chart – the Bollinger Band metric.

The width of the tool’s bands is used to measure volatility: wider bands indicate higher volatility, while the opposite case indicates less enhanced price swings, which may be followed by a move violent in any direction.

One X user noted that the bands were pretty tight last week, recalling that the last time they were this tight, XRP shot up 60,000%.

The bearish scenario

Despite the prevailing optimism among industry participants, some important indicators suggest that XRP could experience a correction in the near future.

The Relative Strength Index (RSI), which measures the speed and change of an asset’s price movements, recently rose above 83, a score last seen in November 2023. This alone be indicative of overbought conditions.

The oscillator ranges from 0 to 100 as a ratio below 30 signals about oversold conditions and possible price rallies. When the score is above 70, XRP may need to be withdrawn. The RSI is currently in neutral territory with a ratio of 60.

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