Key Takeaways

The TD Sequential indicator has signaled a potential trend reversal, despite XRP's upward movement and increased Spot Volume.
The price faces resistance at $2.70, with local support identified at $2.40 if selling pressure escalates.
Ripple's XRP has generated a new sell signal after three months of accurately forecasting trend changes, raising concerns about a possible market correction.

Understanding XRP's Market Dynamics

Ripple's XRP has recently activated a TD Sequential sell signal, which previously demonstrated a consistent ability to indicate impending trend reversals. This follows a notable surge in price, suggesting that the current uptrend may be losing momentum. Historically, such signals have led to price declines, which has many traders on high alert.

XRP's Current Price Challenges

XRP successfully broke free from a descending channel, reaching the $2.60 mark at the time of writing. However, it faced significant resistance around the $2.69 level. Analysis of the 4-hour DMI revealed early signs of market fatigue, with the +DI at 17.55 and –DI slightly higher at 18.33, indicating bearish momentum. Additionally, the ADX reading of 28.02 illustrated some strength in the current trend but without a clear direction. This analysis suggested that the bulls struggle to maintain momentum above resistance without an increase in Spot Volume or more substantial inflows.

Source: TradingView

Selling Pressure Evident in Exchange Data

Recent data indicated a sudden shift in XRP's Netflows, changing from significant outflows of $31.6 million to modest inflows of $653K. This shift indicates rising selling pressure in Spot markets. Such inflow spikes typically suggest that traders are moving their assets to exchanges for profit-taking or hedging. This kind of activity usually occurs near temporary market peaks, potentially resulting in short-term corrections or consolidation periods. Coupled with the TD Sequential sell signal, this suggests that traders are likely being cautious.

Source: CoinGlass

Liquidation Data Highlights Potential Pullback

Analysis from the Binance Liquidation Heatmap revealed a significant concentration of short liquidations between the $2.68 and $2.70 price range. Many bearish traders were unexpectedly impacted by XRP's recent price increase. This short squeeze temporarily created buying pressure, allowing the price to test resistance levels again. However, past this point, liquidity appears limited, suggesting limited potential for price increases unless volume strengthens. The liquidation activities near this resistance level imply that $2.70 continues to serve as a critical threshold. If buyers cannot establish momentum above this level, selling pressure may increase, possibly leading to another correction towards the support zone at $2.40.

Source: CoinGlass

Will XRP Overcome the Sell Signal?

Despite the recent breakout, indicators like the TD Sequential, DMI, and Netflows suggest that the upward momentum may be weakening. For XRP to display strength, it needs to break and maintain a position above $2.70 with robust trading volume. Otherwise, a downward movement towards the $2.40 support level seems increasingly likely. Traders are now observing whether the TD Sequential indicator will maintain its accuracy or if XRP can surpass this resistance level and continue its upward trajectory.