The price of Ripple (XRP) has recently formed a bottom reversal setup, indicating the likelihood of an explosive rally in favour of the bulls. Moreover, Ripple has already broken through the pattern, implying the commencement of this rally.
Investors that have an interest in the token can capitalise on this rally by paying close special attention to the retest of a crucial support level.
Ripple pulls back into the fray
XRP price formed an inverse head and shoulder pattern, suggesting the beginning of an uptrend. This formation is comprised of three valleys of differing depths:
- The central dip, which is typically deeper than the lateral ones, is often thought of as the head;
- The shorter valleys on either side of the head are in turn thought of as the shoulders;
- The peaks of these valleys, when connected, form the neckline, which can determine the breakout.
The 25% objective for his setup is obtained by adding the distance between the neckline and the lowest point of the head. Adding this measurement to the breakout point yields a target of $1. Interestingly, Ripple had already breached the neckline on March 19th, indicating the prospect of a continuation.
Source: AMBCrypto/TradingView
If the retest of the neckline holds, then sidelined investors or buyers can begin purchasing dips and expect the remittance token to rally 25% and retest the $1 psychological level.
The supply distribution metric backs up the bullish thesis from a technical standpoint. This index tracks the XRP wallets that are segregated according to the number of tokens held. This on-chain signal indicates that whales holding more than 10,000,000 XRP tokens are growing. In the past month alone, 18 new whales have joined in, pushing the number of wallets within this category from 317 to 335. This indicates their bullish intents and predictions for XRP’s price, and as a result, market participants should anticipate the remittance token to see a sizeable jump in the coming weeks.
Source: AMBCrypto/santiment
XRP rally only be temporary
In spite of the bullish outlook, sometimes the breakout will still fail to hold on to the retest. This outlook could possibly jeopardise the rally, and so if XRP’s price is pushed below the right shoulder ($0.740), the bullish thesis will crumble. In the event of this price fall, investors can expect Ripple price to slide lower and find support around $0.702. Here buyers can give the uptrend another shot, in spite of the inverse head and shoulders setup being invalidated.
