XRP / BTC price will drop to new lows when this famous chart pattern shows up

XRP cops watch out! The popular head-and-shoulders pattern is one of the most accurate trend indicators.

According to a classic technical indicator, the native XRP token of the Ripple blockchain could cause a real decline compared to Bitcoin.

This pattern, known as Head and Shoulders (H&S), develops when the asset makes three peaks on the same common baseline. The outer peaks, called the shoulders, are roughly the same height, while the tallest middle peak should be called the head.

The H&S pattern completes when the asset drops below the baseline at high volume, confirming a negative breakout. The cutout also serves as the most popular entry point for bearish traders as they seek deeper declines. Although not always, the profit target of the H&S pattern equals the distance between the top and the cutout of the pattern.

At the level tThe hottest ever

CEO Peter Brandt of Factor LLC (a global trading company he founded in 1980) sees the XRP / BTC chart forming an H&S pattern. In a tweet published today, Brandt given Speculation about this bearish indicator could drive XRP / BTC into a “tsunami”. The veteran trader added:

“The completion of the H&S pattern will push XRP / BTC to an all-time low.”

XRP breaks under the H&S neckline at high volume | Source: TradingView, Peter Brandt

The total distance between the top of the H&S pattern and the base lines is approximately 1,794 satoshis. Meanwhile, cutting support coincides with 2,120 Satoshis. Therefore, the profit target of XRP / BTC is calculated according to the formula (2,120–1,794), i.e. 326 Satoshis.

Support levels ahead

However, for XRP / BTC to hit record lows, the pair has yet to break through a number of strong supports.

XRP tests the 200-day simple moving average how first support line | Source: TradingView

XRP / BTC has rebounded from support of the 200-day moving average (200-day SMA; golden wave) at 1,696 satoshis. If the pair holds above the wave, a retest of the H&S clipping at 2,120 satoshis is very likely. Meanwhile, a closing price above 2,120 satoshis will invalidate the H&S structure.

On the flip side, a break below the 200-day SMA will take XRP / BTC to the next support level near 1,555 Satoshis. This level was instrumental in driving the price up over 170% in November 2020. However, the volume profile shows weaker trading activity in recent history, which increases the possibility of not being able to handle the strong sales volume if the H&S outbreak accelerates.

The last line of defense on the volume profile index is 847 satoshis, more than double the H&S profit target of 326 satoshis.

XRP / USD

Against the US dollar, XRP is trending lower in a multi-month descending channel pattern, which promises short-term upside opportunities.

XRP jumps from support under descending channel on 22./6th | Source: TradingView

XRP / USD bounced back to 44.53% after testing the channel’s support trendline on Tuesday, with the price rising as it tested $ 0.69 as an intermediate resistance and bull target, the target pushing price towards $ 0.78.

$ XRP

Reclaiming $ 0.63 is cool, but $ 0.79 is going to be the real test.

Let’s see if $ BTC lets the price even come close to USD 0.79 in the short term … pic.twitter.com/PhHR7OJCQQ

– Posty (@PostyXBT) June 25, 2021

“Choose $ 0.63 back is great, but $ 0.79 would be the real test. Let’s see if BTC allows the price XRP even close to 0.79 dollar short term or not??“.

The $ 0.69 level acts as a resistance between November 2020 and April 2021. Meanwhile, $ 0.78 helped XRP / USD limit the extension of the downtrend in May 2021.

You can see the XRP price here.

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Minh Anh

According to Cointelegraph

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