Another 50% price drop for XRP could happen at the end of July this year. Its price is currently testing a resistance level with a track record that has triggered a 65% price drop.
XRP price bounces 30%
The price of XRP gained almost 30%, rising to $0.36 on June 24, four days after bouncing from $0.28, its lowest level since January 2021.
The token’s rally could extend to $0.41 next, based on its “cup and handle” pattern shown in the graph below.
Curiously, the indicator’s profit target is the same as XRP’s 50-day exponential moving average (50-day EMA; the red wave).
A major resistance hurdle
The cup and handle bullish reversal setup tends to meet its profit target with a 61% success rate, according to veteran analyst Thomas Bulkowski.
But it seems that XRP’s case falls into the 39% failure spectrum due to a conflicting technical signal presented by its 200-4H exponential moving average (EMA).
XRP’s 200-4H EMA (the blue wave on the chart below) has previously served as a strong distribution signal. Notably, in April 2022, the token attempted to break above said wave resistance on multiple occasions, only to face rejections each time.; it fell 65% to $0.28 later.
The ongoing cup and handle breakout has stalled midway after XRP retested the 200-4H EMA as resistance on June 23. Now the token awaits further bias confirmation while risking a price drop similar to what happened after April.
XRP’s overbought Relative Strength Index (RSI), now above 70, also raises the possibility of an interim price correction.
XRP LTF Details
The bearish scenario on XRP’s short-term chart lines up with the massive bearish setups on its long-term chart.
As Cointelegraph previously covered, XRP has entered a breakout stage after breaking out of its “descending triangle” structure in early May.
As a rule of technical analysis, its breakout of the triangle should see it fall as much as the maximum height of the structure, which places its downside target near $1.86.
In other words, Another 50% price drop for XRP could happen at the end of July this year.
50,000,000 #XRP (16,249,045 USD) transferred from Ripple to unknown wallethttps://t.co/FalGAzxNxg
— Whale Alert (@whale_alert) June 23, 2022
50,000,000 XRP ($16,249,045) was transferred from Ripple to an unknown wallet.
Macro risks led by aggressive Federal Reserve policy further reinforce XRP’s bearish bias. The XRP/USD pair has typically traded lower in tandem with riskier assets in 2022, with the correlation coefficient to the Nasdaq Composite sitting at 0.90 as of June 24.
A score of 1 means that the two assets move in perfect sync.
On the contrary, Anticipations of Ripple winning the lawsuit filed by the US Securities and Exchange Commission (SEC) for “allegedly” selling unregistered securities could nullify bearish setups.
I’ve stated for over a year that many @Ripple and #XRP supporters underestimate the negative impact the SEC lawsuit has had. B/c Ripple has done well outside the US and is hiring, etc., people say otherwise. But XRP must be deemed a non-security in the US to fulfill its promise https://t.co/oBmiTQOWfJ
— John E Deaton (203K Followers Beware Imposters) (@JohnEDeaton1) June 22, 2022
I have claimed for over a year that many Ripple and XRP supporters underestimate the negative impact the SEC lawsuit has had. B/Ripple has done well outside of the US and is hiring etc, people say otherwise. But XRP should not be considered insurance in the US to fulfill its promise.
Having said that, XRP could rally towards $0.91 later this year if the ongoing pullback continues. Interestingly, the token has bounced after testing long-term rising trendline supportas it’s shown in the following.
The rebound has also followed XRP’s weekly relative strength index (RSI) falling below 30, an oversold threshold, signaling 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. All investments and operations involve risk, so you should do your own research when making your decision.
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