Jan 17, 2024: XRP’s technical charts are indicating the potential for heightened volatility as the cryptocurrency forms a crucial chart pattern not witnessed since May 2023. The pattern in question is a descending triangle, recognized for its capacity to trigger substantial price movements upon completion.
A descending triangle is characterized by a flat bottom accompanied by a series of lower highs forming a downward slope, signifying greater aggressiveness from sellers compared to buyers. Typically considered bearish, the outcome, however, remains uncertain, and breakouts can occur in either direction. In the case of XRP, this pattern emerges after a period of relative inactivity, indicating a build-up of tension between buyers and sellers contending for market control.
The significance of this pattern is heightened by its formation after a prolonged period since XRP’s last noteworthy technical setup – an inverse head and shoulders pattern in May 2023, a signal traditionally associated with a bullish reversal.
As XRP approaches the apex of the triangle, the converging price action suggests an imminent breakout. The flat bottom, aligning with key support levels, becomes a focal point for traders. A decisive break below this support could confirm the bearish inclination of the pattern, potentially leading to a sell-off. Conversely, a breakout above the descending trendline might invalidate the bearish sentiment, triggering a sharp reversal to the upside.
The current chart indicates that XRP has been testing the lower boundary of the triangle, with the price rebounding from the support level, indicating a potential reversal.
Ethereum Faces Selling Pressure Ethereum recently experienced a sudden influx of selling pressure following a period of upward momentum, during which ETH surpassed local resistance levels, signaling potential bullish behavior. However, the sentiment shifted, and the price underwent a retracement, reaching the 26-day Exponential Moving Average (EMA), a critical juncture on the price chart. The 26 EMA acts as a dynamic level, often serving as a short-term gauge for price momentum. The recent touchpoint where Ethereum’s price bounced off this moving average is noteworthy, suggesting that despite downward pressure, there is underlying buying interest at this level. This bounce-off may indicate a potential price reversal, with buyers stepping in to support Ethereum’s value.
The current chart illustrates Ethereum’s resilience at the 26 EMA, hinting that the recent price drop might be a consolidation phase rather than the beginning of a more significant correction. This bounce-off could be a precursor to a reversal, especially if Ethereum maintains support above the 26 EMA and begins forming a series of higher lows.