Bearish Signal May Affect XRP's Momentum

XRP has shown signs of potential exhaustion after starting the new year with an impressive rally of 15%.

Key Takeaways:

XRP's rally may face challenges due to a bearish divergence on the Relative Strength Index (RSI).
This divergence suggests that while buyers are driving the price higher, the underlying momentum may be weakening.
The chart indicates that XRP is still in an uptrend, but the RSI's downward trend indicates possible short-term concerns.
Traders could anticipate a pullback to support levels between $2.05 and $2.10.

XRP has recently started the year strong, recording a solid 15% increase. However, the asset's 1-hour chart is displaying a bearish divergence on the Relative Strength Index (RSI), a technical indicator that can signal weakening momentum.

This bearish signal implies that XRP's upward movement in price may not have the backing of an increase in buying strength. Simply put, even though buyers are pushing XRP's prices higher, their conviction seems to be weakening. This discrepancy is a warning that a price pullback might be approaching, potentially ending the current rally sooner than expected.

A bearish RSI divergence manifests when an asset sets a "higher high" while the RSI records a "lower high." In the case of XRP, the recent price thrust has pushed it above the $2.15 mark, achieving a new local high. The corresponding trendline joining the latest peaks indicates that bulls were in control of the price movement.

However, the RSI, situated in the chart's lower section, presents a contrasting narrative. Unlike the price, the peaks on this momentum indicator are declining and have not reached "overbought" levels as vigorously as during previous rallies.

The situation presented by the RSI may suggest only short-term risks. Market participants might look forward to a pullback in price, likely testing support levels in the $2.05 to $2.10 range to determine if the upward trend is still valid or if a more significant correction is on the horizon.

Bearish Signal Could Throw Wrench in the Works for XRP Bulls