Ripple's native XRP token jumped to a near seven-week high of $0.28 yesterday despite technical indicators that suggested the cryptocurrency's recent rally might be overdone.
While a re-test of the August 31 high of $0.26 was on the cards, the rally was something of a surprise given that the broader market is under pressure. At press time, the ripple-U.S. dollar (XRP/USD) exchange rate is up 10.47 percent at $0.27. Week-on-week, the cryptocurrency is up 33.33 percent, while month-on-month, it's up 27 percent.
Even so, XRP is well short of its record high of $0.39 set in May. As such, the present XRP rally could be a result of renewed interest among traders ahead of anticipated publicity for the company. If so, that makes the cryptocurrency vulnerable to "profit taking" following the conclusion of the event.
As of now, however, XRP bulls have no reason to fear. Price action analysis indicates the cryptocurrency is all set for a rally to possibly record highs.
A "rounding bottom" is a saucer-shaped formation suggesting bearish-to-bullish trend change. In XRP's case, that means the pullback after the May high of $0.39 is over and the bulls have regained control.
The overbought RSI indicates an extended move to the upside. The term "overbought" indicates a market that has advanced to a point at which, historically, it has tended to reverse and move lower.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.
Climbing wall image via Shutterstock
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.
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