XRP, Ready to Collapse? 'Head and Shoulders' Pattern Nears Completion, Warning of 19% Drop

▲ XRP

An analysis suggests that XRP has entered a structurally bearish phase, forming a typical bearish reversal pattern known as the 'Head and Shoulders,' which is suppressing short-term bullish expectations.

According to cryptocurrency specialized media BeInCrypto, a distinct Head and Shoulders pattern, consisting of a left shoulder, head, and right shoulder, is clearly progressing on the XRP daily chart. The left shoulder was formed at the end of February, followed by the 'head' which peaked around $1.6 in mid-March, and currently, the right shoulder is forming in the approximately $1.33 range.

The critical turning point for this pattern is the neckline, indicated at around $1.26. If this support level breaks, it is estimated that an additional 19% downside could open up.

For a short-term rebound, the recovery of moving averages has been presented as an essential condition. The 20-day exponential moving average is located at approximately $1.35, and the 50-day moving average at approximately $1.42. Specifically, an analysis suggests that a daily close above $1.35 would be interpreted as a meaningful bullish signal.

However, there is significant supply pressure hindering a rise. In the $1.45-$1.47 range, approximately 1.24 billion XRP worth of selling volume is concentrated, making it highly likely that break-even selling pressure will emerge if the price approaches this area. If this volume cannot be absorbed, upward attempts will inevitably be limited.

Conversely, on the downside, a buying base of approximately 719 million XRP has formed in the $1.31-$1.32 range, acting as short-term support. However, it is diagnosed that if selling pressure increases in this range, a neckline test could quickly materialize.

Supply and demand aspects also show pressure. Indicators showing exchange fund flows suggest that buying pressure has decreased by half compared to the end of March. This implies that current rebound attempts are proceeding without strong new capital inflows, and there is insufficient momentum to absorb large-scale selling volumes.

Ultimately, for XRP to break out of its structural bearishness, it needs to recover at least $1.35 and further break above the $1.6 'head' range. Conversely, if these conditions are not met, the ongoing formation of the right shoulder will be completed, and the technical bearish pattern is highly likely to materialize, according to the analysis.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*