XRP price bulls ought to be on the lookout. A statistically renowned trend indicator is the Head and Shoulder pattern. This classical technical indicator could reveal whether Ripple blockchain’s native token, XRP, is on track to make a full bearish swing against Bitcoin (BTC).
The pattern is known as Head and Shoulders (H&S) and it development occurs after an asset forms three peaks atop a common baseline. The Shoulders are represented by the outside peaks and are close in height, while the Head is the middle one, and it is the highest.
Once an asset breaks below its baseline support, the H&S pattern is completed. If high volumes are experienced, then this is a confirmation of a negative breakout. There exists a so-called neckline which acts as the most recognized entry point for bearish traders when they start focusing on deeper downside levels. It is not a common occurrence, but the H&S pattern’s profit target might get to a point where it is equal to the distance between the pattern’s neckline and its high point.
The CEO of Factor LLC (a global trading firm he founded in 1980), Peter Brandt, is confident that the XRP/BTC charts are on the way to form an H&S pattern. Brandt tweeted early Friday raising speculation that this bearish might cause XRP to evolve into ‘a tidal wave’ against BTC. The CEO added that if the H&S pattern played out, it would set the XRP/BTC target at all-time lows.
Is Ripple about to turn into a tidal wave???$XRPBTC is forming a H&S top pattern
Completion of same would set target at all-time-lows pic.twitter.com/GmXmFMoNE6— Peter Brandt (@PeterLBrandt) June 25, 2021
His tweet was accompanied by a chart revealing the formation of this H&S pattern.
Reviewing the distance between the H&S pattern’s top and its baseline reveals a gap of approximately 1,794 satoshis. On the other hand, the neckline support is at 2,120 satoshis. This means that the profit target for the XRP/BTC pair is the difference between the two, which is 326 satoshis.
Although the pair is approaching record lows, there are several strong support levels it has to pass through first.
200-day simple moving average for XRP is its first line of support. Source: TradingView
The pair’s exchange rate catapulted of its 200-day simple moving average support at 1,696 satoshis. It is gets to bounce above 2,120 satoshis, the H&S structure would get invalidated.
XRP kept trending lower against the United States dollar in a months-old descending pattern. However, it shows some short-term upside expectations.
On June 22 XRP steered clear off its lower descending channel support. Source: TradingView
On Tuesday, the XRP/USD pair tested the channel’s support trendline and rebounded by up to 44.53%.
Image courtesy of pixabay
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