XRP Enthusiasts React to Ripple’s SEC Victory
“You’re not bullish enough!” exclaimed an enthusiastic XRP supporter on X last week, following Ripple’s announcement that the U.S. Securities and Exchange Commission (SEC) has dropped its case against them. Many others share this exuberance, and it’s easy to see why. The conclusion of this prolonged legal battle has lifted a significant burden that previously hindered XRP’s performance compared to the broader cryptocurrency market during the bull run of 2021. Furthermore, there is growing excitement surrounding the potential for an XRP ETF and hopes that the token could be included in the U.S. strategic reserve.
However, despite this wave of optimism, the recent price movements seem to diverge from the positive sentiment. Key momentum indicators are signaling a major bearish shift, warning of a potential price decline in the near future.
Market Movements and Indicators
XRP experienced a surge of over 11%, reaching $2.59 last Wednesday, buoyed by the SEC news. Yet, the follow-up has been anything but bullish, with prices remaining range-bound between $2.30 and $2.50. This stagnation comes despite optimism that anticipated reciprocal trade tariffs from President Donald Trump on April 2 could be less severe than previously feared.
Three-Line Break Chart
The first indicator pointing towards a bearish trend reversal is the three-line break chart. This chart focuses solely on price movements, filtering out short-term noise, and helps identify trend changes based on market behavior rather than arbitrary trading rules. The chart consists of vertical blocks known as lines or bars, which can be either green or red. A bullish reversal occurs when a green bar appears, with prices exceeding the highest point of the last three red bars. Conversely, a bearish shift is indicated by the emergence of a new red bar that falls below the lowest point of the preceding three green bars.
In the case of XRP, a new red bar formed in the weekly timeframe early this month and has remained intact following the SEC news. This “weekly” aspect means that the chart aggregates price information over a week, highlighting the significance of this trend shift.
XRP’s three-line break chart, weekly. (TradingView/CoinDesk)
The appearance of this new red bar signifies a shift in momentum from bullish to bearish. Similar patterns have historically marked the onset of prolonged bear markets, as seen in 2021 and early 2018.
MACD Analysis
The moving average convergence divergence (MACD) histogram, a tool used to gauge trend strength and detect trend changes, is currently producing deeper bars below the zero line on the weekly chart. This indicates a strengthening of downside momentum. Notably, this same indicator turned positive in November, after which XRP’s price surged from $1 to over $3.
Additionally, the 5- and 10-week simple moving averages (SMAs) have crossed into bearish territory, further suggesting that the path of least resistance is downward.
XRP’s weekly candlesticks chart with the MACD. (CoinDesk/TradingView)
Bollinger Bands Insights
The Bollinger Bands, which are volatility bands plotted two standard deviations above and below XRP’s 20-week SMA, have widened in response to the sharp price rally in late 2024 and early this year. Historically, assets tend to experience price declines following the significant widening of Bollinger Bands, a trend observed after mid-2021 and early 2018.
XRP’s weekly chart with Bollinger bands. (CoinDesk/TradingView)
Looking Ahead: When Will XRP Turn Bullish?
A decisive movement above $3, the high recorded on March 2, would invalidate the current bearish setup, breaking the pattern of lower highs and suggesting a renewed bullish technical outlook. Some analysts even project that XRP could soar as high as $10 by the end of this decade.
XRP’s daily chart. (TradingView/CoinDesk)
