- XRP banks on support at $0.38 and the squeezing Bollinger Bands for a breakout.
- To ascertain a bullish outcome, XRP is required to close the day above the 100 SMA in the four-hour range.
- The MACD affirms that XRP is hugely undervalued and therefore in a key buy zone.
XRP took up consolidation after the implosion in the second and third weeks of May. Support at $0.38 meant a great deal to the bulls who wished to turn tables around quickly. Nevertheless, recovery has been limited to under $0.46 with XRP forced to settle in a narrow range. According to the governing technical indicator, a breakout is on the cards.
XRP Nurtures A Bollinger Bands Breakout
The freefall in May was nerve-racking, to say the least. It saw XRP plummet to $0.34 and recovery was made impossible due to the withdrawn investor approach. In other words, fear and panic gripped investors who remained skeptical about the ability of XRP to sustain an uptrend.
The narrow range trading meant that XRP is going through a consolidation period. On a positive note, the ongoing squeeze by Bollinger Bands points to an incoming breakout. For a bullish breakout, XRP must flip above the middle boundary of the BB and possibly close the day above the 100 Simple Moving Average (SMA) currently holding at $0.42.
XRP/USD Four-Hour Chart
Odds may favor the bulls if the divergence formed by the Relative Strength Index (RSI) above the moving average holds, in addition to ensuring that support at $0.38 stays intact.
It is essential that investors do not keep their hopes high because the Moving Average Convergence Divergence (MACD) shows that XRP might extend the consolidation period before a breakout comes into play.
XRP Faces Weak Fundamentals
On-chain data from Santiment outlined that recovery might take longer, considering the dismal picture of the network growth metric. Only 1,345 addresses joined the XRP Ledger on May 27, compared to 14,425 on December 23.
Network Growth
The persistent downtrend reveals that XRP is missing out on new momentum with expanding mainstream adoption. That is to say, demand for XRP had dropped tremendously over the last six months. Hence, recovery is unlikely to happen as quickly as investors would wish for.
MVRV Ratio
On the other side of the fence, XRP appeared to be in a buy zone with the market value to realized value (MVRV) imploring investors to jump onto the bandwagon. A -15.61 ratio infers that the cross-border money remittance token was heavily undervalued. Investors are usually persuaded to buy when the ratio drops below the mean line and sell when it goes significantly above the same line.
