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XRP has had a fantastic run lately, hitting remarkable highs and boosting market confidence. Technical analysis and current on-chain metrics, however, indicate that the rally may be coming to an end. The following three factors suggest that a reversal may be imminent. There has not been a steady increase in trading volume to go along with the recent surge in the price of XRP.
The price did manage to break above $1.06 before retracing, but the volume has been dropping over the past few sessions, which suggests that there has not been any consistent buying interest. This divergence suggests that bullish momentum may soon wane, and it is frequently a sign of market exhaustion. On-chain data indicates that after reaching a peak in mid-November, the volume of XRP payments has drastically decreased.
A decline in the quantity of active accounts corresponds with this decline in activity, indicating a decline in network usage. A decrease in transaction volume within the XRP ecosystem might erode the price's underlying support, which might result in a correction. XRP's Relative Strength Index (RSI), which is currently at 85, has been continuously in the overbought zone for a considerable amount of time.
High RSI values like these frequently signify an overheated market, making the asset susceptible to a decline. Profit-taking at these levels may cause the price to decline further as bears take control. The $1.50 level is essential for XRP's support. The next important support is located around $1.20, and if the price breaks out of this range, it may lead to a more severe correction.
XRP may consolidate before attempting another rally, though, if buyers intervene to defend $1.05. Despite the impressive recent performance of XRP, caution is advised due to warning signs like declining volume, decreased payment activity and overbought technical indicators. In order to evaluate the sustainability of the current uptrend, investors should keep a close eye on these metrics.