Source: Cointelegraph
Original: “XRP Price Faces Risk of Falling to $2 as Classic Bearish Chart Pattern Confirms”
Key Points:
XRP may drop to $2 after breaking down from a classic head and shoulders pattern.
A decrease in XRP futures open interest indicates a decline in trader confidence.
XRP price is sending warning signals as bearish technical patterns are confirmed on lower time frames, accompanied by large-scale long liquidations and a drop in open interest.
Since May 9, XRP has formed a head and shoulders (H&S) pattern on its 4-hour chart, suggesting a potential downward trend.
The head and shoulders pattern is a classic bearish reversal signal that typically indicates a trend change is imminent. This pattern consists of three peaks: a higher peak (head) and two lower peaks (shoulders).
The pattern is confirmed when the price breaks below the neckline (the line connecting the low points of the left and right shoulders), releasing a clear sell signal.
In the case of XRP, the pattern was validated during the Asian trading session on May 19, when the price broke and closed below the $2.33 neckline.
If the price continues to stay below the neckline, the XRP/USD pair may further test $2.25 (the current position of the 200-day simple moving average), potentially reaching the pattern target of $2.00. This would result in a total decline of 14% from current levels.
As reported by Cointelegraph, due to weakening bullish momentum, the price may drop to the $2.00 level.
Analyst Egrag Crypto points out that XRP price "must hold" the support level at $2.30, which aligns with the neckline of the head and shoulders pattern, to avoid a breakdown towards these targets.
Charts shared by the analyst show that a drop below $2.30 could trigger a massive sell-off, with an initial target around $2.15, and potentially even down to $1.60.
XRP open interest (OI) has decreased by 18% over the past five days to $4.49 billion. This significant reduction in open interest indicates a decline in trader confidence and market liquidity, putting further pressure on the price.
The latest pullback in XRP price has also triggered a large number of liquidations over the past day, with $12 million worth of long positions being forcibly closed, compared to only $1.4 million in short positions.
This reflects increased selling pressure in the market, as bullish traders are forced to close positions at a loss, further pushing down the price.
Notably, while XRP has dropped 3% in the past 24 hours, daily trading volume surged by 70% to $4.1 billion. A spike in volume during a price decline is typically interpreted as an increase in bearish momentum, or as market participants adjust their positions while waiting for XRP's next move.
Related: JPMorgan CEO Says Bank Customers Will Soon Be Able to Buy Bitcoin (BTC)
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