XRP has been trading with mixed signals on its price charts, leaving traders uncertain about its next move. Over the past month, the cryptocurrency has shown resilience at the $2 support level, with bulls defending it well. However, rising sell pressure in recent days has raised concerns about the possibility of a further decline.

XRP Bulls Defend $2 Support Amid Rising Sell Pressure

For the past several weeks, XRP bulls have managed to keep the price above the critical $2 support level. This support zone has been strong since December when XRP formed a range between $2 and $2.5. Over the last month, the price has reverted back to this support zone, and sellers have struggled to push the price lower.

While the $2 level has held firm in the past, recent price action and a rise in sell pressure could signal that the situation is changing. Over the past four days, selling activity has picked up pace, with more traders deciding to offload their positions. This has led to a slight decline in price, which has raised concerns among traders about a potential move below the $2 support.

Market Sentiment and Legal Victory: The Bigger Picture

XRP’s recent legal victory, which some had hoped would trigger a bullish rally, didn’t quite have the desired effect. Despite the positive legal news, the altcoin has failed to break out strongly. Instead, it’s been caught in a sideways range, with price action indicating a lack of strong buying momentum.

One factor contributing to this is the overall market sentiment, which remains largely bearish. At the time of writing, Bitcoin (BTC) was testing the $83,000 support level, and if BTC struggles to maintain its position, it could drag XRP down further. As BTC goes, so too often does XRP, which means traders should monitor Bitcoin’s trends closely to gauge whether a bullish reversal for XRP is on the horizon.

Key Technical Indicators Point to Bearish Pressure

When looking at XRP’s technical indicators, it’s evident that bearish pressure is mounting. On the 1-day chart, key indicators like the Chaikin Money Flow (CMF) and the Awesome Oscillator (AO) have been trending negatively. The CMF, which tracks the flow of money in and out of an asset, has dropped below -0.05 over the last ten days, signaling a decline in buying interest and an increase in selling pressure. The AO also shows a lack of momentum, with red bars appearing on the histogram, indicating that bearish forces are in control.

The Accumulation/Distribution (A/D) line, which measures the flow of capital into and out of an asset, has remained stable at early March levels. However, this stability also points to a lack of dominant buying pressure, with neither buyers nor sellers controlling the market. This indecision could lead to further downside if sellers take the upper hand.

Testing Key Support: $2 Is the Next Critical Level

XRP is currently testing the short-term support at $2.225, which it recently fell below. This marks a crucial level for traders to watch. If the price continues to struggle at this level and breaks below $2, a 5% drop to the next support level around $1.95 could be in the cards. A drop below $1.95 would invalidate the idea of a bounce at $2 and signal further bearish action.

Despite the selling pressure, the $2 support remains a critical level. Historical price action suggests that it could hold, and if it does, XRP may bounce back to test higher levels. However, if the market sentiment doesn’t improve and BTC fails to regain upward momentum, XRP could see further declines.

Conclusion: A Cautious Approach for Traders

While XRP’s price may face a potential 5% drop due to rising sell pressure and lack of buying momentum, it’s not entirely clear whether the $2 support will break. Traders should remain cautious and monitor key levels closely. A bounce from $2 could offer a buying opportunity, but if XRP falls below $1.95, it could signal further downside.

In this uncertain environment, managing risk is key. Buyers should be cautious about entering positions unless the $2 support holds strong, and they should watch for signs of recovery or additional declines in the broader market to make more informed decisions.