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Market analyst Steph recently pointed out an interesting occurrence on the 3-week XRP chart, as the Stoch RSI drops to 0.0.
XRP has had a bearish three months since October, having collapsed 35% in the fourth quarter of this year, contributing to an annual drop of 10.39%. With this downtrend, XRP is now on track to record its first yearly loss since the 2022 bear market, when it crashed 59.13%.
XRP Flashes Rare Signal Amid Downtrend
However, amid the ongoing bearish price action, with XRP relinquishing the crucial $2 psychological support, analyst Steph (@Steph_iscrypto) recently called attention to an interesting event on the 3-week chart, which provides insight into how deep the downtrend has gone.
According to Steph, the Stochastic RSI indicator recently dropped to an absolute 0 on the 3-week XRP chart. For the uninitiated, the Stoch RSI is a momentum indicator that shows how strong an asset’s price movement is by measuring the RSI relative to its recent range.
Notably, the indicator has a value range between 0 and 100 and typically spots overbought (above 80) and oversold (below 0) conditions and potential trend reversals more quickly than the standard RSI.
Specifically, when the Stoch RSI drops to lower values, it signals weakening momentum and suggests the crypto token may be oversold, increasing the chance of a short-term bounce or reversal. Since XRP’s downward trend began, the indicator has continued to drop on multiple timeframes.
Stoch RSI Drops to 0
Interestingly, while anything below 20 represents oversold conditions, the Stoch RSI has collapsed to 0 on XRP’s 1-week and 3-week charts. Steph paid closer attention to the 3-week timeframe, as it would take an incredibly bearish push to take the Stoch RSI to 0 on such a high timeframe.
This event is so rare that the recent occurrence is only the second in XRP’s entire history. According to Steph, the first time this happened was during the 2022 bear market, when the XRP price eventually bottomed at $0.28 in June 2022 amid the contagion from the Terra ecosystem collapse.
While this marked the bottom in 2022, Steph chose not to make any predictions. However, he suggested that this event could indicate that selling pressure was near exhaustion already. According to him, this shows that the downside momentum has dried up, but it doesn’t confirm that a bullish reversal would emerge soon.
Notably, when the Stoch RSI collapsed to 0 during the 2022 bear market, XRP still traded within a consolidation phase for months before it eventually staged a recovery. “These signals tend to mark cycle lows, not short-term trades,” Steph concluded.