Ripple Struggles to Reclaim Long-Term Pattern, XRP’s Future Hangs in the Balance
The trajectory of Ripple’s XRP token remains uncertain as it attempts to recover above the median line of a long-term pattern. The outcome of this endeavor could have significant implications for the future momentum of XRP.
While short-term indicators suggest a continuation of XRP’s upward movement, the long-term outlook remains unclear and leans toward a bearish sentiment.
In a notable development last week, XRP stood out among the top 10 largest cryptocurrencies by market capitalization as it registered an intraweek increase. This positive shift followed a court ruling that prevented the SEC from concealing crucial documents in the ongoing Ripple case.
The decision was seen as a small victory for Ripple in its legal battle against the regulatory authority. Additionally, a report by research company Messari highlighted the flourishing Ripple ecosystem, despite the prolonged proceedings with the SEC.
The Ripple-SEC case continues to unfold, with new details emerging. According to Ripple’s lawyer, John Deaton, the SEC was aware from the beginning that XRP was not classified as a security.
Ripple’s struggle to recover from critical support becomes apparent when analyzing its technical aspects. Since June 2022, the XRP price has been trading within an ascending parallel channel, a corrective pattern that indicates a bearish trend and suggests an eventual southward breakout from the channel.
As expected, on March 29, the price encountered resistance at the upper boundary of the channel, triggering a subsequent downward movement. This resulted in a breach below the $0.53 horizontal level and a lower high on April 14.
The break below the channel’s midline confirmed the bearish trend for XRP, indicating a likely breakout below the lower boundary of the channel.
However, price action following this breakout has been inconsistent, with the price bouncing back and now attempting to rise above the midline of the channel again.
Furthermore, the Relative Strength Index (RSI), after falling below the 50 mark and the uptrend line, has subsequently recovered above both levels. The RSI serves as a momentum indicator, reflecting overbought/oversold conditions and bullish/bearish sentiment based on its position above or below the 50 mark.
Meanwhile, wave analysis of the shorter 4-hour timeframe suggests that the current bounce represents a temporary relief rally that could be followed by a renewed decline.
According to this analysis, XRP has completed the formation of a five-wave bearish structure, indicating a bearish trend. Moreover, the decline followed an A-B-C upward movement, further supporting the likelihood of a bearish scenario.
Consequently, it is probable that the ongoing rise is merely a corrective rally.
If this is the case, the most probable target for a top formation would be the $0.50-$0.52 range, corresponding to the 0.5-0.618 Fibonacci retracement levels.
Despite this short-term bullish outlook for XRP, a drop below $0.41, marking the starting point of wave A, would indicate a bearish trend even in the short term. In such a scenario, an immediate decline toward the channel’s support line at $0.37 would be expected.