After enduring months of downward pressure, XRP has broken its descending trend line. Yet the token is up against resistance from four major moving averages. For traders, understanding the significance of this and what comes next is no small matter.
A Breakthrough After Months of Decline
The latest from Cheeky Crypto shows that XRP has finally moved past the trend line that was holding down the price for so long. While such a move is typically seen as bullish and gives investors reason to be optimistic about an upward turn, one should not get carried away. The broader technicals tell a more difficult story and dampen any enthusiasm.
Why Moving Average Resistance Matters
XRP has made a statement by breaking the resistance of its descending trend line, yet it remains constrained by the four key moving averages above it: the 20, 50, 100, and 200-day. The host of Cheeky Crypto says XRP is in something of a quandary. To be sure, the break of the trend line is a sign of what could be a recovery, but remaining under those moving averages shows that the asset has not entirely escaped bearish pressure.
There is value for the novice trader in watching these moving averages as they provide dynamic support and resistance. A price below them typically means sellers are in control. So until XRP closes above the 20-day moving average and works its way back to the higher ones, any talk of a recovery is premature.
What Traders Should Watch Next
Market participants are faced with a dilemma in the current climate. According to the team at Cheeky Crypto, it is not uncommon for both moving average resistance and a breakout to give credible signals at the same time.
Should XRP be able to sustain its breakout and start to close in on or above the resistance nearby, one could see the beginning of a genuine recovery and an influx of new buyers. But there is another side to consider: a failed breakout that sees XRP retreat below the trend line would put the price under more downward pressure. That kind of outcome could erode confidence among traders and prompt further selling. For this reason, the host of Cheeky Crypto advises traders to keep a close eye on the price action near the breakout and any nearby resistance. It is in those areas that the market will decide if the trend turns up or if the bears retain their momentum.
Source — Cheeky Crypto: https://www.youtube.com/watch?v=xt8e5wnT3WI