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One of technical analysis's most renowned signals has been printed by XRP. A golden cross is being formed on the daily chart by the 50-day moving average pushing through the 200-day around the $1.37 level.
Market composition changes
However, the price action is certainly prompting additional cautioseness. The cross comes after a real change in the market's composition. XRP was clearly in a downward trend from May to mid-August, falling from above $1.50 to about $1.00 under a 200-day average that was steadily declining.
When XRP surged through all of the major moving averages in a few days due to a massive volume-backed rally in August, that trend was broken. The 200-day, which had been a ceiling, became a support. September verified the modification. After emerging from a declining trendline, XRP retested the $1.28 to $1.30 range before rising to a local high close to $1.66.
A trend reversal is defined in textbooks as the replacement of lower lows with higher lows. The most recent candles are already falling behind reality, and the golden cross is a lagging indicator. XRP printed lower highs at $1.66, $1.63, and $1.58 after failing to hold above $1.60.
The price has dropped back to $1.50 due to a run of red daily candles, and the volume on the most recent attempts at a rebound is diminishing in comparison to the August surge. After cooling from overbought territory to about 58, the RSI may continue to decline before hitting oversold levels.
Short-term momentum is negative
Despite the long-term averages turning positive, it is evident that the short-term momentum has turned negative. The short-term green average is rising at $1.44, where immediate support is located. The key line below it is the $1.37 zone, where the 50-day and 200-day now converge.
A close below it would put significant pressure on the golden cross and push XRP closer to the $1.30 region. Bulls must recover $1.60 and then break through the resistance between $1.66 and $1.70 in order to regain momentum on the upside.
The golden cross indicates a shift from a bearish to a bullish long-term trend. However, the next move is not guaranteed. The short-term path of least resistance is still downward until XRP stops reaching lower highs, and the cross might just be coming at the end of the rally.