The XRP price is currently at a crucial juncture, which could determine its future trajectory. Despite experiencing a nearly 100% rally following a significant ruling in the Ripple Labs vs US Securities and Exchange Commission (SEC) case, XRP has since given up most of its gains in just 43 days, as reported by NewsBTC.

However, the situation is not entirely bleak. The recent price decline has brought XRP to important support levels that must be maintained to avoid a significant drop. Additionally, there is optimism surrounding the formation of an incredibly rare golden cross pattern on the weekly chart.

Golden Cross: A Positive Sign for XRP Bulls?

As of August 25, 2023, XRP is trading at $0.5115. The weekly chart reveals the highly-discussed golden cross pattern, which occurs when a short-term moving average crosses above a long-term moving average and often indicates a shift from a bearish to a bullish trend. In the case of XRP, the 50-week exponential moving average (EMA) has surpassed the 200-week EMA.

This development is typically regarded as a signal for an upcoming upward trend. However, the token’s price is currently hovering just above the 200-week EMA, which is at $0.5083. If XRP closes below this level on a weekly basis, it could spell trouble.

In addition to undermining the significance of the golden cross pattern, a weekly close below $0.5083 may also jeopardize the intact uptrend line (black) that has been in place since early January. A dip below the $0.50 mark could prove critical.

Given this scenario, the golden cross pattern on the weekly chart offers a glimmer of hope. However, the risks remain evident. If the token breaks the $0.50 threshold on a weekly basis, a sharper decline appears likely, potentially dropping to the 78.6 Fibonacci level at $0.4350.

Prior to potentially reaching the low of just under $0.30 this year, XRP may find some support at $0.41 and $0.36. As seen in previous weeks, updates regarding the legal battle between Ripple and the SEC have the potential to act as strong catalysts for an XRP price rally. While Judge Torres is currently reviewing the SEC’s interlocutory appeal, the trial is scheduled for mid-April next year.

A Historical Perspective

Interestingly, XRP has only experienced one golden cross on a weekly basis in its history, which occurred in late November 2020.

Within three weeks, XRP witnessed a 196% increase. However, the SEC’s lawsuit against Ripple Labs and the classification of XRP as a security prematurely derailed the rally, causing the golden cross pattern to prove ineffective as the price tumbled.

The next week or two will likely reveal whether the golden cross chart pattern will hold true this time.

Featured image from Medium, chart from TradingView.com

FAQs

What is a golden cross?

A golden cross is a technical analysis pattern where a short-term moving average crosses above a long-term moving average, often signaling a shift from a bearish to a bullish trend.

What does a golden cross indicate for XRP?

A golden cross on the XRP chart suggests the potential for a bullish trend reversal, indicating that the price may increase in the future.

What are the support levels for XRP?

Support levels for XRP are areas where buying is expected to occur, potentially preventing the price from falling further. In the case of XRP, the support levels to watch are at $0.41 and $0.36.

What are the risks if the XRP price breaks below $0.50?

If the XRP price falls below $0.50 on a weekly basis, it could lead to a sharper decline, potentially dropping to the 78.6 Fibonacci level at $0.4350.