XRP price closed on May 23 with a bullish hammer candlestick pattern formation on the 12-hour chart that was triggered on May 24 when Ripple XRP surged above $0.816. The candlestick pattern was formed in the ‘legal uncertainty range’ associated with November 2020 high and the December 2020 low when the SEC case was announced. The Ripple XRP bounce has been short-lived, and the digital asset is on pace for a new correction low.
From May 24 to May 27, Ripple XRP oscillated along with the psychologically important $1.00 but could not overcome the declining 50 four-hour SMA. The XRP price action during this time was passive with little volume, showing no real investor commitment. The result was a clear head-and-shoulders pattern top.
On May 28, on a surge in trade volume, XRP broke below the neckline at $0.968 and quickly fell to a price of $0.846 before staging a minor rebound into the stubborn 50 four-hour SMA. Ripple price has since dropped below the head-and-shoulders measured move target price of $0.818.
The failure to hold the measured move target price of $0.818 raises the possibility that XRP price will test the upper level of the ‘legal uncertainty price range’ at a price of $0.780 and may even test the February 21 high at $0.757, representing a 20% decline from the neckline. Any further weakness leaves XRP vulnerable to a plunge below the May 23 low at a price of $0.652 and may even force the cross-border remittances token to engage the 78.6% Fibonacci retracement level from the December 29 low at $0.555, yielding a 30% from the price at the time of writing.
To void the bearish narrative, the XRP price needs to rally above the right shoulder of the head-and-shoulders pattern at a price of $1.036. It would motivate Ripple to test the 38.2% retracement level of the April-May decline at $1.153. Further upside will be complicated by the convergence of the 50% retracement support level at $1.307 with the 200 four-hour SMA at $1.338.
Despite a series of business milestones, the threatening SEC case dictates that XRP will be predominately influenced by the sentiment of the broader cryptocurrency market and the Ripple price action of the bellwether cryptocurrencies, Bitcoin and Ethereum.
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