Ripple’s XRP has grown by 4% over the past seven days, riding a wave of emotion-improving the broader Altcoin market.
However, despite this upward momentum, the key on-chain indicator suggests that the rally could quickly lose steam as the XRP holder quickly locks its profits.
XRP is up 4% this week, but traders are quietly leaving the market
GlassNode data reveals a steady increase in XRP’s Exchange Net Position Change over the past week. On-chain data shows that this metric, which tracks the net amount of tokens travelling to centralized exchange, rose to 283 million XRP for eight months on July 7th.
The timing is noteworthy as the surge in exchange inflow coincides with XRP’s recent price increases. This means that many traders appear to be using the rally as an opportunity to leave the position, putting downward pressure on the token.
Furthermore, despite the XRP spikes, its Chaikin Money Flow (CMF) is gradually moving downwards, forming a negative divergence with the token price. At the time of writing, this metric is 0.01, poised below the zero line.
The CMF indicator measures how an asset enters and leaves the asset. If its value is positive, it suggests high demand and upward price momentum. Meanwhile, negative CMF measurements point to increased sales pressure and increased bearish emotions.
The XRP CMF is not yet below the zero line, but the continuous decline is weakening the accumulation. This trend often precedes a bearish reversal, and in the case of XRP, the outcome will likely be visible unless new demand enters the market to absorb the growing supply.
Losing this support could reduce to $2.14
On the daily charts, XRP is retesting the underlines of the upward channel that has been popular within the last week.
This channel is formed when the asset prices consistently create higher and higher lows within two upward slop parallel trend lines. The upper line acts as a dynamic resistance, while the underline acts as a dynamic support.
Therefore, when starting a test at the lower price limit, especially after a strong gathering, it often shows fatigue with upward momentum.
This critical break under the low support line is considered a bearish signal as it suggests that buyers can no longer hold the trend. If this happens, your XRP risks falling to $2.14.
However, if the Bulls regain control and demand rises, the XRP could raise its price to $2.35.
The price of the post-XRP will rise, but here the rally could be a trap.
