Why Could XRP Fall 8%?

• Ripple price is retesting and failing to break the daily resistance level at $0.626, leaning towards a price decline going forward.
• On-chain data paints a bearish picture for XRP, with a negative OI-weighted funding ratio and a long-short ratio below one.
• A daily candlestick close above $0.626 would invalidate the bearish thesis.

Ripple (XRP) price looks to pare back most of its recent gains after retesting and failing to break above the resistance from the daily resistance level on Saturday and is down 4.23% over the next two days. At the time of writing, it is trading up slightly by 1% on Tuesday. In addition, the chain data suggests bearishness going forward, as evidenced by the negative OI-weighted funding ratio and a long-short ratio below one.

Ripple price set for a decline after retesting the daily resistance barrier

Ripple price retested and was rejected by its daily resistance level at $0.626 on Saturday. It fell by 4.23% over the next two days. On Tuesday, it traded slightly up 1% to $0.593.

If Ripple price continues to pull back, it could drop 8% from the current trading level at $0.593 to retest the daily support at $0.544.

The Relative Strength Index (RSI) and Awesome Oscillator (AO) indicators on the daily chart are trading just above their neutral levels of 50 and zero, respectively. Both indicators need to trade below their neutral levels for bearish momentum to be sustained.

XRP/USDT Daily Chart

Coinglass’ OI-weighted funding ratio data is a crucial metric for traders and analysts to gauge market sentiment and predict future price movements. This measure is based on funding rates in futures contracts, weighted by their open interest. A positive rate (Longs pay shorts) usually signals bullish sentiment, as long positions offset shorts. Conversely, a negative rate (Shorts pay Longs) indicates bearish sentiment, with shorts offsetting longs.

In the case of XRP, this metric is -0.0084%, reflecting a negative rate, indicating that shorts are paying longs. This scenario often signifies bearish sentiment in the market, suggesting potential downward pressure on Ripple’s price.

XRP OI weighted funding rate chart

Additionally, Coinglass data shows that XRP’s long-short ratio is 52.43%. This ratio reflects bearish sentiment in the market as the number has a higher percentage of shorts compared to longs, suggesting that more trades are anticipating the asset’s price to fall, supporting Ripple’s bearish outlook.

XRP Long-Short Ratio

However, if Ripple price closes above the daily resistance level of $0.626, it would change the structure of the market by creating a higher high on the daily chart, which may lead to a 5.3% increase to revise the high of 31 July of $0.658.