In a new technical analysis, crypto analyst Dark Defender has identified a bullish ‘Cup and Handle’ pattern on the XRP daily chart, indicating the potential for substantial gains. The pattern, characterized by a ‘cup’ that resembles a rounded bottom and a ‘handle’ that indicates a slight downtrend, suggests a continuation of an uptrend.
Dark defender notes, “XRP formed a cup & handle pattern on the daily time frame. We set targets at $1.05 and $1.88 with the Elliott Waves, and now the Cup-Handle pattern is also flashing with XRP to hit the targets.”
Cup & Handle pattern indicates a 208% rally in the short term
The cup formation, which began in July and extended through October, peaked around $1.05, a critical resistance level. The XRP price then fell by around 52%, perfectly in line with the classic setup. The correction from the top of the cup to the bottom is ideally 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 top of the cup. Specifically, the pattern suggests a bullish continuation, with the ‘cup’ representing a period of consolidation followed by a breakout, while the ‘handle’ represents a smaller pullback before the price continues to rise.
Within the chart, Dark Defender shows key support and resistance levels that are crucial for this pattern to hold. The handle portion of the pattern has potential support at $0.5286, which Dark Defender has indicated should not be interrupted by a close below the primary support at $0.6044 for two consecutive days to maintain the bullish outlook.
Currently, the chart shows XRP trading above these support levels, with resistance looming overhead. The next significant resistance is spotted within the handle formation, marked at $0.6649. A decisive break above this level could confirm the predicted outcome of the pattern and put XRP on its upward trajectory towards the mentioned price targets.
Elaborating on the handle’s potential moves, the analyst states: “Can the handle be extended to $0.5286 Support? We have yet to close below the primary support at $0.6044 for two 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 reach $1.05 and $1.88 in the near term.”
XRP price is facing 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, XRP price fell below the Fibonacci level of 0.382 at $0.6275 and has not been able to close above this key resistance on a daily basis since.
Furthermore, 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 take place, the price must overcome both the 20-day EMA and the 0.382 Fibonacci level. If this happens, Dark Defender’s bullish forecast could move a little closer.
Featured image from iStock, chart from TradingView.com