Ripple (XRP) has encountered resistance around the $2.66 level, suggesting a slowdown in its recent rally. After surging by more than 13% last week, XRP is now facing a potential pullback as traders take profits, increasing selling pressure in the market.

Profit-Taking Weighs on Ripple’s Momentum

After Ripple’s remarkable surge over the past month, increasing profit-taking among investors is raising concerns about the sustainability of the recent price gains. XRP has risen more than fourfold from early November to early December, with the price now sitting at around $2.47 on Monday, December 9.

On-chain data, particularly Santiment’s Network Realized Profit/Loss (NPL) indicator, shows that many XRP holders have cashed in on their profits following the sharp rally. This sudden spike in realized profits is a common signal that the market could experience a short-term correction. A similar pattern was observed in May 2021, when the NPL indicator surged, leading to a 35% correction in the following two weeks.

Bearish Sentiment Grows Amid Selling Pressure

Along with profit-taking, other indicators are suggesting growing bearish sentiment in the market. Coinglass data reveals that the long-to-short ratio for XRP is at its lowest in a month, at 0.85. This suggests that more traders are betting against XRP’s price, indicating that many expect a decline in the near term.

The combination of increased selling pressure and the long-to-short ratio highlights the weakening bullish momentum, increasing the likelihood of a short-term pullback.

Ripple Price Faces Key Resistance at $2.66

XRP has hit resistance around the $2.66 level, which has capped further price increases in recent days. At the time of writing, Ripple is trading slightly down at $2.47, signaling potential weakness in the short term.

Technical indicators show that if Ripple fails to break above the $2.66 resistance, it could retrace to lower levels, potentially testing the psychologically significant $2.00 level. The Relative Strength Index (RSI) on the daily chart is currently at 70, hovering at the overbought threshold. If the RSI starts to decline, it could signal the exhaustion of the recent bullish momentum, strengthening the case for a pullback.

XRP Price Forecast: Bullish or Bearish?

If Ripple manages to break above $2.66 and close above the $3.00 mark, it could signal a continuation of the rally, potentially retesting its all-time high (ATH) of $3.40, last seen in January 2018. However, with profit-taking gaining traction and bearish sentiment growing, a pullback remains a real possibility unless the bulls regain control and push the price above key resistance levels.

For now, XRP’s short-term outlook appears uncertain, with the price action mainly driven by market sentiment and the ability of bulls to overcome the $2.66 resistance. If this resistance level holds, traders should brace for a potential pullback in the days ahead.

Conclusion: Ripple’s Near-Term Outlook

While Ripple’s recent rally has been impressive, the growing selling pressure and the appearance of key technical indicators suggest that the bullish momentum might be running out of steam. Profit-taking and bearish sentiment are increasing, which could lead to a short-term pullback.

However, if Ripple can break through the $2.66 resistance and close above $3, it could signal the resumption of its rally, with a potential move toward its ATH. Traders should monitor these levels closely to assess the next direction for XRP.