XRP price rally stalls near key level that last time triggered a 65% crash

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XRP’s upside retracement risks exhaustion as its price tests a resistance level with a history of triggering a 65% price crash.

XRP Price Rebounds 30%

The price of XRP is up nearly 30%, rising to $0.36 on June 24, four days after a rally from $0.28, its lowest level since January 2021.

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According to the “cup-and-handle” pattern shown in the chart below, the coin could lead a retracement rally to the next $0.41.

XRP/USD 4-hours price chart with a “cup and handle” pattern. Source: TradingView

Interestingly, the profit target of the indicator is similar to the 50-day exponential moving average (50-day EMA; red wave) of XRP.

XRP/USD daily price chart with 50-day EMA on the upside target. Source: TradingView

major resistance barrier

According to experienced analyst Thomas Bulkowski, the cup-and-handle bullish reversal setup met its profit target at a 61% success rate.

But it appears that the case for XRP falls into the 39% failure spectrum because of a conflicting technical signal presented by its 200-4H Exponential Moving Average (EMA).

XRP’s 200-4H EMA (blue wave in the chart below) has previously acted as a strong distribution signal. Notably, in April 2022, the token attempted to break above said wave resistance several times, only to face rejection on each attempt; Later it fell 65% to $0.28.

XRP/USD 4-hours price chart with resistance at the 200-4H EMA. Source: TradingView

The ongoing cup-and-handle breakout has stalled midway after XRP retested the 200-4H EMA as resistance on June 23. Now, the coin awaits confirmation of further bias, while the price drops that occurred after April are at risk.

XRP’s overbought relative strength index (RSI), which is now above 70, also raises the possibility of an interim price correction.

XRP LTF Breakdown In progress

The downside scenario on the shorter time-frame chart of XRP is in line with a huge bearish setup on its longer-time chart.

As previously covered by Cointelegraph, XRP has entered a breakdown phase after exiting its “descending triangle” structure in early May.

As a rule of thumb, a breakout of its triangle should cause it to drop to the maximum height of the structure, placing its downside target near $1.86.

XRP/USD weekly price chart with a ‘descending triangle’ setup. Source: TradingView

In other words, by the end of July this year the XRP price could drop by another 50%.

Macro risks, led by the Federal Reserve’s aggressive policy, further strengthen XRP’s bearish bias. The XRP/USD pair has traded lower with a generally riskier asset in 2022, with the Nasdaq Composite’s correlation coefficient sitting at 0.90 as of June 24.

XRP/USD Weekly Correlation with Nasdaq. Source: TradingView

A score of 1 means that the two assets operate in perfect sync.

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Conversely, the expectation that Ripple will win a lawsuit filed by the US Securities and Exchange Commission (SEC) for selling “allegedly” unregistered securities may negate the bearish arrangement.

That being said, XRP could rally towards $0.91 by the end of this year if the ongoing retracement continues. Interestingly, the coin bounced back after testing the long-term ascending trendline support, as seen below.

XRP/USD Weekly Price Chart. Source: TradingView

XRP’s weekly relative strength index (RSI) bounced back even after falling below 30 – an oversold threshold, indicating a potential buying opportunity.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, so you should do your own research when making a decision.