XRP’s ongoing recovery risks running out of steam as its price tests a resistance level that has caused the price to drop 65% in the past.

XRP price recovers by 30%

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The price of XRP surged almost 30%, climbing to $0.36 on June 24, four days after recovering from $0.28, the lowest level since January 2021.

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Under the cup-and-handle pattern shown in the chart below, the token pullback rally could extend to $0.41.

Four-hour XRP/USD price chart with a cup and handle pattern. Source: Trading View
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Interestingly, the profit target of the indicator is the same as that of XRP’s 50-day exponential moving average (50-day EMA; red wave).

Daily chart of XRP/USD with the 50-day EMA rising. Source: Trading View

The main obstacle of resistance

According to an experienced analyst, the cup and handle bullish reversal pattern tends to reach its profit target with a 61% success rate. Thomas Bulkowski.

But it looks like the XRP case is falling into the 39% failure spectrum due to the conflicting technical signal presented by its exponential moving average (EMA) 200-4H.

The 200-4H EMA of XRP (blue wave in the chart below) served as a strong distribution signal earlier. It is noteworthy that in April 2022, the token tried several times to overcome the indicated wave resistance, but with each attempt it was faced with a refusal; it later dropped 65% to $0.28.

Four-hour XRP/USD chart with 200-4H EMA resistance. Source: Trading View

The ongoing cup-and-handle break stalled midway after XRP retested the 200-4H EMA as resistance on June 23. The token now awaits further confirmation of the bias, risking a price drop similar to what happened after April.

The Overbought Relative Strength Index (RSI) of XRP, which is now above 70, also raises the possibility of a temporary price correction.

XRP LTF breakdown in progress

The downside scenario on the shorter XRP chart matches the giant bearish setups on the longer chart.

As Cryptooshala previously reported, XRP entered a crash phase after breaking out of its descending triangle structure in early May.

According to the technical analysis rule, a break of his triangle should cause him to fall to the maximum height of the structure, which sets his downside target near $1.86.

XRP/USD weekly price chart with a descending triangle setup. Source: Trading View

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

The macro risks caused by the Fed’s hawkish policies further reinforce XRP’s bearish bias. The XRP/USD pair has typically traded lower in tandem with riskier assets in 2022, with a Nasdaq Composite correlation coefficient of 0.90 as of June 24.

XRP/USD weekly correlation with Nasdaq. Source: Trading View

A score of 1 means that the two assets are moving perfectly in sync.

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Conversely, the expectation that Ripple will win a lawsuit filed by the US Securities and Exchange Commission (SEC) for the “supposedly” sale of unregistered securities may nullify bearish setups.

That being said, XRP could recover to $0.91 by the end of this year if the current correction continues. Interestingly, the token bounced after testing long-term support for an uptrend line, as shown below.

Weekly XRP/USD chart. Source: Trading View

The rebound also followed a weekly drop in the XRP Relative Strength Index (RSI) below 30, an oversold threshold that signals a potential buying opportunity.

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