Ripple Price Forecast: Assessing XRP short-term outlook as exchange reserves surge amid weak derivatives 

• XRP fluctuates between the 100-day EMA support and the 50-day EMA resistance on Monday.
• XRP recovery could face challenges as exchange reserves increase, exceeding 3.6 billion tokens.
• A weak XRP derivatives market hints at low retail demand.

Ripple (XRP) edges higher on Monday, trading between a key support established at $2.83 and resistance at $2.92. This short-term bullish outlook reflects the subtle recovery in the broader cryptocurrency market, which has been mirrored by Bitcoin (BTC) and Ethereum (ETH) since Friday. 

If bulls steady the uptrend toward the critical $3.00 level, the path of least resistance could remain upward, increasing the chances of a breakout and targeting the all-time high of $3.66 reached on July 18. Still, traders may need to assess key metrics and indicators to gain insight into XRP's ability to sustain the uptrend, or resume the downtrend toward the round-number support at $2.50.

XRP exchange reserves expand amid a weak derivatives market 

XRP holders have transferred large amounts of the token into exchanges since the beginning of September, thereby increasing reserves. According to CryptoQuant data, reserves on Binance increased by 19.4% to 3.6 billion XRP from 2.9 billion XRP as of Sunday. This surge coincided with the XRP price declining from $3.18 on September 13 to around $2.70 on September 22. 

Increasing exchange reserves often signal incoming selling pressure. Investors often transfer assets to exchanges with the intention of selling. The move also signals a lack of confidence in XRP's ability to sustain the uptrend. This metric is worth monitoring, as a steady increase in exchange reserves often signals headwinds that precede sell-off activities.

XRP Ledger: Exchange Reserve - Binance | Source: CryptoQuant

Meanwhile, retail interest in XRP has remained relatively suppressed since mid-July, marking the correction from the all-time high. CoinGlass data indicates that the futures Open Interest (OI), referring to the notional value of all futures contracts, averaged $7.56 billion by the time of writing on Monday after peaking at a record high of $10.94 billion on July 22. 

Low or declining OI suggests reduced market participation, as fewer traders hold positions in XRP futures. With dwindling engagement, there is less speculation, which limits short-term price movement. Sentiment around XRP could remain bearish amid declining OI, especially if the liquidation of long positions persists, leaving traders counting losses as was experienced last week.

XRP Futures Open Interest | Source: CoinGlass

Technical outlook: XRP bulls eye $3.00 breakout 

XRP fluctuates between support provided by the 100-day Exponential Moving Average (EMA) at $2.83 and the 50-day EMA resistance at $2.92. Bulls appear intent on extending the weekend recovery above the $3.00 critical level and later break above a descending trendline in place since the record high of $3.66.

Based on the Relative Strength Index (RSI), which has risen to 48, bullish momentum is building. If the RSI breaks into the bullish region above the midline, the path of least resistance could remain upward, supported by a strong tailwind as more traders are encouraged to seek exposure.

Traders will look out for a buy signal from the Moving Average Convergence Divergence (MACD) indicator before increasing or seeking exposure to the cross-border money remittance token. Such a signal manifests when the blue line crosses above the red signal line, encouraging traders to position themselves ahead of the next leg up.

XRP/USDT daily chart

Key milestones would include a sustained break above the short-term 50-day EMA at $2.92, followed by gains above the descending trendline and the supply zone at $3.18. On the other hand, losing the 100-day EMA support at $2.83 could encourage risk-on sentiment, increasing the probability of XRP resuming the downtrend toward the near-term support at $2.70 and the 200-day EMA at $2.61.