Bulls keep close eye on XRP for breakout as it enters lengthy consolidation phase
XRP is facing a prolonged consolidation phase, a trading pattern that offers possible hints regarding the token’s subsequent price trajectory.
Indeed, the value of XRP has stagnated in the same region for several months, showing no signs of a possible breakout. This development contrasts the general market, as most altcoins have taken advantage of the 2023 rally to record price breakouts.
In particular, between late October 2022 and January 25, the value of XRP has mainly traded in the range of $0.40 and $0.46. However, the token has momentarily breached key support and resistance levels during the period while sustaining a high trading volume.
Why XRP is consolidating
Although the price movement can be viewed as a positive sign as it suggests that the coin’s price is not experiencing the volatility associated with the market, it can also be interpreted differently.
The scenario can indicate that XRP is pausing before making a significant move in either direction. In such a phase, the XRP community may be monitoring the market conditions and waiting for a clear signal to buy or sell. Historically, such consolidation has ended up in a price breakout. Therefore, bulls could be monitoring the situation before deciding to move.
Furthermore, the price stagnation could have been triggered by market participants who believe XRP will likely go down, resulting in attempted dumping of the token in large amounts.
However, XRP appears to have responded to this campaign triggering a strong demand for the coin and buyers willing to absorb the large sell orders. This could signal that XRP is staring at a possible price breakout in the coming days.
It’s important to note that consolidation can indicate indecision among XRP investors due to the inability to predict the possible price movement. This has coincided with a phase when XRP is expected to be affected by the ongoing legal case between Ripple and the Securities and Exchange Commission (SEC). In the matter, the blockchain firm is accused of selling unregistered securities in the form of XRP.
XRP price analysis
By press time, XRP was trading at $0.41 with daily losses of about 3.5%. On the weekly chart, XRP is up 2%.
The token is controlling a market cap of $20.6 billion.
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