Profit-taking slows momentum after recent rally

• Ripple price action faces resistance around $2.66, suggesting a downturn on the horizon.
• On-chain data shows that XRP’s holders realize profits after a massive rally, increasing the selling pressure.
• A daily candlestick close above $3 would invalidate the bearish thesis.

Ripple (XRP) price trades slightly down, around $2.47, on Monday after rallying more than 13% in the previous week. On-chain data shows that XRP’s holders realize profits after a massive rally, increasing the selling pressure and indicating a short-term pullback in the upcoming days.

XRP holders selling their bags

Ripple price has gained more than four times from early November to early December. Profit-taking is another short-term risk for Ripple after such a massive rally. Santiment’s Network Realized Profit/Loss (NPL) indicator suggests holders book profits at the top. XRP’s NPL metric spiked on December 1, indicating that holders are, on average, selling their bags at a significant profit. A similar spike was seen on May 1, 2021, after rallying in the earlier month, which led to a correction of over 35% in the next two weeks. If history repeats, XRP could see a similar fall in the short term.

Ripple Network Realized Profit/Loss chart. Source: Santiment

According to Coinglass’s data, XRP’s long-to-short ratio is 0.85, the lowest level in one month. This ratio reflects bearish sentiment in the market, as the number below one suggests that more traders anticipate the asset’s price to fall, hinting that the Ripple price could face a pullback ahead.

Ripple Long-to-Short ratio chart. Source: Coinglass

Ripple Price Forecast: Bulls show signs of exhaustion

Ripple price faces resistance around the $2.66 level on Sunday. At the time of writing on Monday, it trades slightly down around $2.47.

If the $2.66 level continues to hold as resistance, XRP could extend the decline to retest the psychologically important level of $2.00.

The RSI on the daily chart reads 70, hovering around the overbought level of 70, and points downwards, indicating weakness in bullish momentum. If the RSI exits overbought territory, it could provide a clear sell signal for a pullback.

XRP/USDT daily chart

Conversely, if XRP breaks above $2.66 and closes above $3, it could extend the rally and retest its all-time high (ATH) of $3.40, seen on January 7, 2018.