XRP eyes breakout above $1.42 as traders increase long exposure

Key takeaways

• XRP is hovering near $1.40 after successfully defending its short-term support level at $1.38.
• Futures open interest has risen slightly to 2.24 billion XRP, pointing to a minor increase in derivatives positioning.
• The open-interest-weighted funding rate remains in positive territory at 0.01%, indicating that buyers are willing to pay fees to keep their long positions open.
• Securing a daily close above $1.42 could pave the way for a rally toward $1.50 and eventually $1.70.

On Tuesday, Ripple’s XRP experienced a minor 1% decline, trading close to the crucial psychological level of $1.40 after buyers stepped in to defend support at $1.38.

This stabilization comes after the token faced rejection last week during an attempt to push past selling pressure near $1.50.

Sustaining a position above $1.40 would brighten XRP’s near-term prospects. Conversely, another failure to break higher could spark profit-taking and signal buyer fatigue.

Derivatives data continues to lean bullish, characterized by a slight rise in futures open interest and consistently positive funding rates.

Even so, technical indicators suggest that upward momentum has slowed, highlighting the importance of the $1.42 resistance level for XRP’s next directional move.

XRP futures Open Interest edges higher

XRP’s derivatives market showed signs of consolidation on Tuesday. According to CoinGlass, open interest for perpetual futures ticked up slightly to 2.24 billion XRP, compared to 2.23 billion XRP on Monday and 2.2 billion XRP on Sunday.

Open interest reflects the total volume of active, unsettled futures contracts. When open interest rises alongside prices, it typically signals that market participants are deploying new capital into long positions.

However, current leverage remains below the 2.78 billion XRP peak recorded on August 15, indicating that overall market exposure has not fully rebounded from its recent drop.

A continued influx of retail capital could provide the necessary momentum to push and hold XRP above $1.40. On the flip side, a drop in open interest would point to fading buyer conviction, leaving the cryptocurrency vulnerable to a deeper correction.

Meanwhile, the open-interest-weighted funding rate held steady in positive territory at roughly 0.01%.

CoinGlass data indicates this metric has remained relatively flat since August 28. A positive funding rate means long-position holders pay fees to short sellers, which generally reflects a dominant bullish sentiment.

This shows that traders are still comfortable paying a premium to maintain their upward bets, even as XRP consolidates.

However, positive funding does not assure upward price action. If long positions become too crowded while XRP struggles to clear key resistance, a sudden downward turn could trigger a wave of long liquidations and accelerate losses.

Broader market sentiment also remains generally supportive. The Crypto Fear and Greed Index registered a score of 69 on Tuesday, keeping market sentiment firmly in “Greed” territory, though slightly down from Monday’s reading of 71.

While persistent optimism can encourage traders to build larger positions in assets like XRP, such high readings can also leave the market susceptible to profit-taking if bullish momentum stalls.

If current sentiment persists, it should support bullish positioning; however, a sudden shift in market mood could depress demand for XRP and other major alternative cryptocurrencies.

XRP must break $1.42 to target $1.50

Following its rebound from the $1.38 support level, XRP is trading near $1.40. The token continues to hold above its key exponential moving averages, maintaining its overall bullish structure.

The immediate hurdle is at $1.42, where a descending trendline is currently capping recovery attempts. A daily close above this level would confirm a short-term breakout, bringing the recent high of $1.50 back into play.

If buyers can clear the $1.50 mark, the next major target for the rally is $1.70.

The Relative Strength Index is currently hovering around 59, which is above the neutral 50 threshold. This suggests that buyers still hold the upper hand, though momentum is noticeably weaker than it was during the preceding run-up.

Additionally, the Moving Average Convergence Divergence indicator has dipped slightly below its signal line into negative territory, pointing to a cooling of upward momentum rather than a definitive bearish trend change.

Should XRP fail to overcome the $1.42 resistance, the 200-day EMA at $1.36 serves as the primary line of defense.

A daily close below the 200-day EMA could intensify selling pressure, potentially dragging the price down to the 50-day EMA near $1.26, with deeper support provided by the 100-day EMA at $1.24.

These moving averages create a significant support zone that could attract buyers during a deeper pullback. As long as XRP trades above this cluster, its long-term bullish trend remains intact.

Ultimately, the near-term trajectory depends on whether buyers can establish $1.40 as solid support and secure a daily close above $1.42. Reaching this milestone would set the stage for another push toward $1.50 and $1.70, whereas a rejection would likely force XRP back to test $1.38 and the 200-day EMA.