Today’s XRP rally is unlikely to last long as the reversal pattern suggests that a 20%+ correction is in the offing.
Ripple Donates $5 Million in XRP for Trump Inauguration
The price of XRP has surged more than 20% in the last 24 hours, reaching $2.36 on December 21. The price increase came after cryptocurrency exchanges Coinbase and Kraken donated $1 million to Trump’s inauguration committee. Fox Business was the first to report, with a report suggesting that Ripple could be offering $5 billion in XRP to a single project. Last week, the New York Times quoted Ripple CEO Brad Garlinghouse as saying something similar.
Coinbase, Kraken, and Ripple are all battling the U.S. Securities and Exchange Commission (SEC) in separate lawsuits. Trump’s re-election could raise the prospect of a friendly SEC under candidate Paul Atkins, who is known for his pro-crypto stance.
XRP holders may see this as a way to resolve Ripple’s legal dispute with the SEC, which has led to the recent price spike. XRP Technicals Show More Uptrends Ahead
Today’s XRP price rally coincides with a key technical support level.
First, XRP’s relative strength index (RSI) briefly dipped into the oversold zone below 30 on the 4-hour chart.
Second, XRP found support near the 200-4-hour moving average (200-4-hour EMA; blue wave) near $2.00. This support is connected to a horizontal support area (marked in red), which is a previous area of strength accumulation. However, looking at the daily chart, the XRP price appears to have formed a descending triangle pattern, which is confirmed by the decline in the trend line and the support at the horizontal line.
A descending triangle that occurs during an uptrend is called a reversal pattern. In technical analysis, this pattern is defined when the price breaks below the support of the horizontal line and falls to the highest high of the triangle.
Applying the same principle to the XRP/USD chart, the December low is placed near $1.77, a 22.50% decline from current price levels. This price level is in line with the 50-day moving average (red wave). However, a break above the upper line of the triangle could cancel the bearish pattern, sending XRP price to $2.90 (December high).
