Medium and long-term perspectives: creation of constructive biases
Market sentiment towards the Fed and BoJ rate paths, coupled with demand for XRP-place ETFs and progress on the market structure bill on Capitol Hill supports a bullish outlook. The perspective of Fed rate cuts and lower inflation add to market optimism. Typically, falling borrowing costs and slowing inflation boost flows into risky assets.
Given this market dynamic, the short-term outlook (1-4 weeks) remains cautiously bullish, with a price target of $2. The medium-term (4-8 weeks) and long-term (8-12 weeks) outlook remains constructive, with price targets of $2.5 and $3.0, respectively.
Downside risks for the bullish scenario
Several scenarios could call into question the bullish outlook. These include:
- The Bank of Japan announces a neutral interest rate of between 1.5% and 2.5% and the need to aggressively fight inflation.
- US inflation is rising and the Fed is putting the brakes on a rate cut in March.
- THE MSCI removes the list of digital asset treasury (DAT) companies. Delistings would likely reduce interest in XRP as a Treasury reserve asset.
- US Senate challenges market structure bill.
- Spot XRP ETFss report cash outflows.
These scenarios would likely push XRP towards $1.75, signaling a bearish trend reversal.
In summary, the near-term outlook remains cautiously bullish as fundamentals outweigh bearish technicals. At the same time, the medium and long term outlook is positive.
Financial analysis
Technical outlook: EMAs signal caution
XRP fell 1.0% on Monday, December 22, following the previous day’s 0.58% loss, closing at $1.9032. The token underperformed the broader crypto market, which fell 0.08%.
Monday’s losses left XRP below the 50-day and 200-day exponential moving averages (EMA), indicating a bearish bias. Even if the technical data remains bearish, the fundamentals increasingly prevail over the technical structure.
The main technical levels to watch include:
- Support levels: $1.75, then $1.50.
- 50-day EMA resistance: $2.1244.
- 200-day EMA resistance: $2.4046.
- Resistance levels: $2, $2.5, $3.0 and $3.66.
Looking at the daily chart, reclaiming the psychological $2 level would open the door for a retest of the 50-day EMA. A break above the 50-day EMA would indicate a near-term bullish trend reversal, bringing the 200-day EMA and the $2.5 resistance level into play.
A sustained move in the EMAs would support the medium-term bullish outlook and the longer-term (8-12 weeks) price target of $3.0.
