What to Know:
- XRP charts reveal a hidden bullish divergence, a pattern historically preceding significant rallies.
- A potential short squeeze looms, with over $695 million in XRP shorts at risk if the price rebounds.
- Technical analysis suggests limited downside risk for XRP in the near term, with potential for upside volatility.
XRP price charts are currently displaying a hidden bullish divergence, a technical pattern that has historically preceded substantial price rallies. This divergence, characterized by higher lows in price alongside lower lows in the Relative Strength Index (RSI), suggests weakening downside momentum. The setup could provide a much-needed boost for XRP bulls amidst market uncertainty.
The three-day chart for XRP reveals this “hidden bullish divergence,” a pattern that has appeared twice before in XRP’s recent history. In early 2022, a similar divergence led to a 69% bounce, while another instance between late 2023 and early 2024 preceded a 49% rally. These historical examples suggest that XRP tends to experience quick rebounds following this signal, although these rallies may not always indicate a long-term bullish reversal.
“I’d be hoping to hold this range and spring back as the week goes on, but the bias is bearish in the moment,”
Currently, derivatives data indicates a significant imbalance between long and short positions on XRP, with over $695 million in cumulative short liquidation leverage. This skewness toward short positions suggests growing pessimism among traders, but also sets the stage for a potential short squeeze. A modest rebound toward the $2.60 to $3.50 range could trigger a cascade of short liquidations, amplifying upward price movement.
The convergence of technical indicators and derivatives data paints a cautiously optimistic picture for XRP. While broader market conditions and regulatory developments will undoubtedly play a role, the current setup suggests limited downside risk and the potential for significant upside volatility. Investors and traders will be closely watching to see if XRP can capitalize on these conditions.
Source: Original article
