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, which is characterized by a ‘cup’ resembling a circular bottom and a ‘handle’ indicating a slight downward drift, suggests a continuation of the upward trend.
dark defender notes, “XRP formed a cup and handle pattern on the daily time frame. We have set targets at $1.05 and $1.88 with Elliott Waves, and now the cup-handle pattern is also blinking for XRP to reach the target.
Cup and handle pattern signals 208% rally in short term
The cup formation, which began in July and extended through October, peaked around $1.05, a key resistance level. The price of XRP then dropped by approximately 52%, which aligned perfectly with the classical setup. The correction from top to bottom of the cup should ideally be a maximum of 50%.
The subsequent handle has formed a resistance zone between $0.75 and $0.6649, which is about a 20% retracement from the peak of the cup. Specifically, the pattern suggests a bullish continuation, where the ‘cup’ represents a period of consolidation following a breakout, while the ‘handle’ forms a small pullback before the price rises.
Within the chart, the Dark Defender shows important support and resistance levels for this pattern to remain valid. The handle portion of the pattern holds potential support at $0.5286, which the dark defender indicated should not be broken under the primary support at $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 hovering above them. The next significant resistance is noted within the handle formation, marked at $0.6649. A decisive break above this level could confirm the predicted outcome of the pattern and set XRP on its upward trajectory towards the mentioned price target.
The analyst elaborated on the possible movements of the handle, saying, “Can the handle be extended to the $0.5286 support? We still need to close under the primary support at $0.6044 for 2 consecutive days. So right now the answer is no.” However, he also said, “The main structure still holds, and XRP is expected to reach $1.05 and $1.88 in the near term.”
XRP price is facing stiff resistance
XRP price is currently facing another important resistance when analyzing Fibonacci retracement levels on the 1-day chart. Last Thursday, XRP price dropped below the 0.382 Fib level at $0.6275 and has since failed to close above this key resistance on a daily basis.
Furthermore, the price of XRP is held between the 20-day and 50-day exponential moving averages (EMA), between $0.6234 and $0.5919. For a bullish scenario, the price needs to overcome the 20-day EMA as well as the 0.382 Fibonacci level. If that happens, Dark Defender’s bullish prediction may be coming a little closer.
Featured image from iStock, chart from tradingview.com
source: www.newsbtc.com
