XRP price has formed a bottom reversal setup which suggests the possibility of an explosive move favoring the bulls. Moreover, Ripple has already breached the pattern, suggesting the start of this rally. Interested investors need to pay close attention to the retest of a crucial support level to capitalize on the incoming move.
Ripple bulls back in the fray
XRP price set up an inverse head and shoulder pattern, suggesting the start of an uptrend. This technical formation contains three valleys of varying depths. The central dip is usually deeper than the lateral one and is referred to as the head. The shorter valleys on either side of the head are referred to as shoulders.
Connecting the peaks of these valleys results in the formation of a neckline, which is useful in determining the breakout.
The 25% target for this setup is obtained by adding the distance between the neckline and the head’s lowest point. Adding this measurement to the breakout point yields a target of $1. Interestingly, Ripple already breached the neckline on 19 March and shows the possibility of continuation.
If the retest of the neckline holds, then sidelined investors or buyers can start buying the dips and expect the remittance token to rally 25% and retest the $1 psychological level.
The bullish thesis put forth from a technical perspective is supported by the supply distribution metric. This index tracks the XRP wallets that are segregated based on the number of tokens held.
This on-chain indicator shows that whales holding more than 10,000,000 XRP tokens have been accumulating. The number of wallets belonging to this category increased from 317 to 335.
A total of 18 new whales have joined in the last month, painting their intentions and bullish expectations of XRP price. Therefore, market participants can expect the remittance token to see a sizeable jump in the coming days or weeks.
Regardless of the bullish outlook, sometimes the breakout fails to hold on the retest and slides lower. Such an outlook is possible and could threaten the optimistic outlook. However, if bears push the XRP price to produce a lower low below the right shoulder ($0.740), the bullish thesis will face invalidation.
In such a case, investors can expect the Ripple price to slide lower and find support around $0.702. Here buyers can give the uptrend another go despite the invalidation of the inverse head and shoulders setup.