XRP: Dead Cat Bounce or Actual Recovery Attempt?

XRP has recovered modestly from the $2.70 level, where selling pressure temporarily subsided, but now finds itself at a crucial crossroads. Debate has centered on whether the bounce is the start of a recovery attempt, or just a dead cat bounce in the middle of a larger downtrend.

XRP wants $3

As can be seen from the chart, XRP is currently trading at about $2.78, below the 100-day EMA at about $2.83 as well as its descending trendline resistance. Bulls are put to the test right away by these two obstacles. It is still possible that the current move will be classified as a temporary relief rally rather than a structural recovery, until XRP can convincingly regain this zone and maintain momentum above $2.90-$3.00.

The recent decline below $2.88 was noteworthy, because it deprives XRP of a crucial mid-range support level. At $2.60, the price then fell back to the 200 EMA, which held firm and served as the foundation for the current rebound. Accordingly, even though bears control the short-term trend, the longer-term structure holds firm as long as $2.60 is not broken.

Momentum not flipping

The outlook offered by momentum indicators is not entirely clear. There are currently no clear indications of bullish divergence, and the RSI is close to 44, indicating neutral-to-weak momentum. Compared to the strong sell-side activity during the decline, volume on the rebound has also been muted, which raises doubts about how strong the recovery will be.

XRP might aim for $3.10 and possibly retest the descending resistance line close to $3.20 if it is able to break above $2.90. A move like that would start to cast doubt on the idea that this is merely a dead cat bounce. On the other hand, if $2.83-$2.90 cannot be regained, there may be more downward pressure, which could push XRP back toward $2.70, and perhaps retest $2.60.

XRP’s recovery is still uncertain. The $2.83-$2.90 range will determine whether this move is a true attempt at recovery or merely a brief rest before lowering the leg again. As of right now, it is still best to exercise caution until XRP can demonstrate that it can effectively reverse its downward trend.