XRP‘s Bullish Momentum Faces Headwinds
XRP, the native token of Ripple, has surged over 50% in the past month, riding the wave of improving risk appetite and the prospect of an altcoin season. But recent price action suggests the rally might be taking a breather. Key technical indicators are flashing warning signs, pointing to a potential short-term pullback, even as long-term bullish signals remain in place.
Double Top and Rising Wedge Hint at Sell-Off
On the four-hour chart, XRP formed a double top pattern near $2.65, a bearish reversal pattern. This pattern, characterized by two peaks and a neckline around $2.47, suggests weakening momentum after a strong rally. A confirmed breakdown below the neckline could trigger a move toward $2.30.
Adding to the bearish sentiment is a rising wedge pattern, also visible on the four-hour chart. This pattern indicates a shift from bullish to bearish momentum, particularly when the price breaks below the lower trendline. XRP is currently testing this trendline and the 50-4H Exponential Moving Average (EMA). A breakdown below these support levels could lead to a 20% drop, potentially taking the price down to $1.94.
On-Chain Metrics Suggest Trader Denial
XRP‘s Net Unrealized Profit/Loss (NUPL) metric, which measures the difference between the current price and the average purchase price of XRP, is currently in the “Belief–Denial” zone. This historically indicates that traders are holding onto a bullish outlook despite fading momentum.
During previous cycles, entering this phase preceded significant corrections in XRP‘s price. If history repeats itself, the combination of technical patterns and on-chain data suggests the possibility of further downside risk in the short term.
Long-Term Charts Remain Bullish
Despite these short-term concerns, the long-term picture for XRP remains bullish. A multi-month falling wedge pattern on the three-day chart suggests a potential 45% rally to $3.69 if XRP breaks out from the pattern.
Furthermore, symmetrical triangle patterns and Fibonacci extensions on the two-week chart project long-term price targets as high as $5.24 and even $17. However, these bullish targets depend on XRP maintaining support levels and avoiding a breakdown from the falling wedge pattern.
Conclusion
While the current price action might be concerning for short-term traders, the overall long-term outlook for XRP remains positive. As always, it’s crucial to exercise caution and conduct thorough research before making any investment decisions.
