• XRP remains above the 100-day EMA support, but choppy market trends keep it confined below the multi-month trendline.
• The futures Open Interest declines to $8.85 billion as retail investors lean toward risk-off sentiment.
• Short-term consolidation between support at $2.70 and resistance at $3.00 is likely to persist.

Ripple (XRP) is struggling to hold above a short-term support at $2.85 on Wednesday, reflecting a relatively calm cryptocurrency market after a sharp decline the previous day. 

Attempts by the bulls to sustain gains above the $3.00 level late last week failed to gain momentum, leaving the XRP price susceptible to headwinds. Early profit booking alongside changing market dynamics triggered losses to $2.82. If the short-term $2.85 support holds, the chances of a breakout above the $3.00 psychological level could increase significantly.

XRP struggles amid a weak derivatives market 

Retail interest remains shaky as evidenced by the futures Open Interest (OI) averaging at $8.85 billion after crossing the $9 billion mark on Tuesday. 

OI is the notional value of outstanding futures contracts. Therefore, a correction implies that traders could be losing confidence in the uptrend and closing their long positions. A steady decline in the OI often signals the potential for an extended price correction.

XRP Futures Open Interest | Source: CoinGlass

CoinGlass data indicates that many traders, particularly those holding long positions, are experiencing losses as liquidations persist. At least $21.17 million were wiped out in long positions compared to $2.17 million in shorts on Tuesday. 

Although the pullback has taken a breather, at the time of writing on Wednesday, long position liquidations average $3.35 million. In contrast, short positions have incurred losses of approximately $447,000, indicating that highly leveraged retail traders were anticipating a sustained breakout above the $3.00 level.

XRP Futures Liquidations | Source: CoinGlass

Technical outlook: Assessing XRP’s short-term technical outlook

Ripple holds marginally above the 100-day Exponential Moving Average (EMA) at $2.85 as bulls strive to push for gains above the critical $3.00 level. The upward-facing Relative Strength Index (RSI) holds at 45, highlighting a subtle bullish momentum. 

A breakout in the RSI into the bullish region above the midline would mean a stronger bullish grip, increasing the chances of a breakout past the descending multi-month trendline on the daily chart.

XRP has, since its record high of $3.66 in mid-July, formed a lower high pattern, emphasising the downtrend.

XRP/UDSDT daily chart

Still, the 50-day EMA resistance at $2.92 could delay the recovery. Traders should temper their bullish expectations, as a correction to the next key support at $2.70, which was previously tested in late September, cannot be ruled out yet. The 200-day EMA at $2.63 is in line to provide additional support if headwinds intensify.