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%
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.
Under the cup-and-handle pattern shown in the chart below, the token pullback rally could extend to $0.41.
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).
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.
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.
In other words, there could be another 50% drop in the XRP price by the end of July this year.
50,000,000 #XRP ($16,249,045) transferred from Ripple to unknown wallethttps://t.co/FalGAzxNxg
— Whale Alert (@whale_alert) June 23, 2022
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.
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.
I have been declaring for over a year that many @ripple as well as #XRP supporters underestimate the negative impact of the SEC lawsuit. B/c Ripple is well established outside the US and is hiring people etc, people say otherwise. But XRP must be considered a non-security in the US to fulfill its promise. https://t.co/oBmiTQOWfJ
— John Deaton (203k followers, beware of impostors) (@JohnEDeaton1) June 22, 2022
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.
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.
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Credit : cointelegraph.com