XRP price is up 2% on May 7, buoyed by US-China trade talk optimism, with key support at $2.08 critical for sustained recovery.

Key takeaways:

XRP price is up 2% on May 7, buoyed by US-China trade talk optimism, with key support at $2.08 critical for sustained recovery.

Whale accumulation signals XRP price strength.

XRP price must hold above $1.83–$2.00 support to continue upside, analysts say.

XRP (XRP) price displayed strength on May 7, showing an increment of 2% over the last 24 hours. The slight uptick in XRP price follows a report by Bloomberg that sparked optimism among crypto traders.

According to the report, US President Joe Biden is open to meeting with Chinese President Xi Jinping at the upcoming APEC summit in November, and both sides are planning to resume trade talks.

The report comes after months of heightened geopolitical tension between the US and China, which reached a peak in March with the threat of shutting down the Chinese-owned social media platform TikTok in the US.

However, recent developments suggest a potential shift in tone. Earlier this week, US Treasury Secretary Janet Yellen expressed willingness to engage with China openly and directly.

Key levels for XRP price to watch

Certain indicators suggest that XRP’s ongoing price rise may not just be a short-term reaction to the positive macroeconomic news. For instance, Santiment’s Supply Distribution metric showcases a sustained increase in the supply held by entities with a 1 million –10 million token balance.

These addresses now own 9.44% of the total XRP supply, showing a 1.2% rise since January 1.

This signals that whales did not sell on the recent drop to $1.60 but accumulated XRP, positioning themselves for further gains.

By purchasing during downturns, these large entities decrease selling pressure and create a floor for the price, encouraging smaller retail investors to join in.

In other developments, XRP open interest (OI) experienced a slight 0.32% increment to $3.65 billion over the last 24 hours. This indicates a minimal surge in trader confidence and liquidity.

However, a 17% drop in trading volume to $3.9 billion is a point of concern. It suggests traders are engaging with low conviction and await a clear directional bias for the next leg of XRP price trend.

Traders are optimistic that XRP can revisit its seven-year high above $3.40 and continue from there. But its potential to rally further depends on whether it can stay above key support.

Data from CoinGlass and TradingView shows that XRP price bounced off the 200-day Simple Moving Average (SMA) at $2.08 on May 6, recovering as much as 4.5% to reach today’s high of $2.17.

This level, also the 50-day SMA, is critical for buyers to defend in order to sustain the recent leg of XRP’s recovery from the March 15 low of $1.33.

The 200-day SMA also coincides with the election Volume-Weighted Average Price (VWAP) and the monthly rVWAP, as shown in the chart below.

“This is an area that we want to see continue to get defended,” said trader and analyst Dom in a May 6 post on X, adding that failure to hold above this level could see XRP drop toward $1.90.

Another analyst, Egrag Crypto, said XRP price “should not and cannot close below $1.83.”

This is an important level to watch because a move below it could be viewed as a bearish candle, which could put downward pressure on the price in the next trading session.

Meanwhile, pseudonymous analyst XForceGlobal believes “XRP is still well within bullish territory” as long as it stays above the multi-month low of $1.60, which was reached on April 7.

This suggests that there is still room for the price to rise, but it will be important to watch for signs of weakness, such as a move below key support levels or a sustained period of low trading volume.

If XRP price can manage to stay above these key levels, then it could be on track to continue its gains and potentially reach new all-time highs in the coming months.

However, if the price does slip below these supports, then it could be a sign that the recent rally is running out of steam and the price could be set for a steeper decline.