In a new technical analysis, crypto analyst Dark Defender has identified a bullish ‘Cup and Handle’ pattern on the XRP daily chart, signaling the potential for substantial gains. The pattern, which is characterized by a ‘cup’ resembling a rounding bottom and a ‘handle’ indicating a slight downward drift, suggests a continuation of an upward trend.
Dark Defender notes, “XRP formed a cup & handle pattern in the daily time frame. We set targets for $1.05 & $1.88 with the Elliott Waves, and now the Cup-Handle pattern is also blinking XRP to reach the targets.”
Cup & Handle Pattern Hints At 208% Rally In The Short-Term
The cup formation, which began in July and extended through October, saw its peak around $1.05, a critical resistance level. The XRP price then dropped by approximately 52%, perfectly aligning with the classical setup. The correction from the top of the cup to the bottom should ideally be a maximum of 50%.
The subsequent handle has formed a resistance zone between $0.75 and $0.6649, which is approximately a 20% retracement from the cup’s peak. Notably, the pattern suggests a bullish continuation, where the ‘cup’ represents a period of consolidation followed by a breakout, while the ‘handle’ forms a smaller pullback before the price continues to ascend.
Within the chart, Dark Defender showcases key support and resistance levels crucial for this pattern to remain valid. The handle part of the pattern has potential support at $0.5286, which Dark Defender has indicated should not be broken by a close under the primary support of $0.6044 for two consecutive days to maintain the bullish outlook.
Currently, the chart indicates that XRP is trading above these support levels, with resistance looming overhead. The next significant resistance is noted within the handle formation, marked at $0.6649. A decisive break above this level could confirm the pattern’s predicted outcome and set XRP on its upward trajectory toward the mentioned price targets.
The analyst elaborates on the handle’s potential movements, stating, “Can the handle be extended towards $0.5286 Support? We still need to close under the primary support of $0.6044 for 2 days in a row. So the answer at the moment is No.” However, he also added, “The main structure is still in place, and XRP is expected to hit $1.05 & $1.88 in the short term.”
XRP Price Faces Stiff Resistance
The XRP price is currently facing another crucial resistance when performing a Fibonacci retracement level analysis on the 1-day chart. Last Thursday, the XRP price fell below the 0.382 Fibonacci level at $0.6275 and has not been able to close above this key resistance since then on a daily basis.
Moreover, the XRP price is sandwiched between the 20-day and 50-day Exponential Moving Average (EMA), between $0.6234 and $0.5919. For the bullish scenario to play out, the price needs to overcome the 20-day EMA as well as the 0.382 Fibonacci level. If this happens, Dark Defender’s bullish prediction could come a little closer.
Featured image from iStock, chart from TradingView.com