Ripple’s XRP is treading on thin ice as the bearish bias towards the token increases. XRP has fallen nearly 7% as the overall market has stagnated this week. It has broken below the $3 threshold and is extending the downtrend.
Technical indicators now point to a potential decline to three-month lows as bullish sentiment fades and selling picks up.
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XRP’s short-term outlook darkens
The decline in XRP over the past few days has pushed the XRP price below the 20-day exponential moving average (EMA) forming a dynamic resistance level at $2.9065.
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The 20-day EMA measures the average price of an asset over the past 20 trading days, giving more weight to recent prices.
If an asset is trading above its 20-day EMA, it indicates that the bulls are in control and short-term momentum favors upside.
Conversely, when the price drops below this level, as it did for XRP, it signals increased selling pressure and a bearish short-term outlook for the market.
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Furthermore, on the daily chart, the Elder Ray index of XRP continues to show negative values, indicating that the bullish momentum is weakening. For context, the size of the red histogram bars that make up the indicator has gradually increased over the past four sessions, indicating increasing sell-side pressure.
The Elder Ray Index indicator measures the strength of market bulls and bears by comparing buying pressure (bull power) and selling pressure (bear power). If the value is positive, there is more buying pressure than selling pressure in the market, indicating a potential uptrend.
On the other hand, when the value is negative like this, the bears have the upper hand and market participants begin to sell the tokens intensely.
XRP balance on edge
XRP is currently holding above the support floor at $2.7435. If the current bearish momentum holds, the altcoin could retest this level soon. Breaking below this support floor could send the token as high as $2.6371, a price level not seen in the past three months.
On the other hand, a resurgence of buyer interest could push the price back above $2.87 and trigger a short-term rebound towards the 20-day EMA of $2.9061.
