XRP is facing short-term downside risks in the context of bullish long-term projections.
According to Cointelegraph, XRP experienced a significant rebound, increasing by over 50% in the last month after reaching a local low of $1.80. This rise is attributed to improved risk appetite and anticipation of an 'altseason'. However, recent technical patterns suggest short-term downside risks for the cryptocurrency. A double top formation near $2.65 indicates a possible trend reversal, with the pattern consisting of two distinct peaks and a neckline around $2.47. After the second peak, XRP fell below this neckline, confirming a bearish setup. This break suggests a potential decline towards $2.30 if buyers fail to push the price above $2.65, signaling weakening momentum after a robust rally.
XRP has also broken a rising wedge pattern, indicating a shift in momentum from bullish to bearish. The cryptocurrency is currently testing the support of the 50-4H exponential moving average (EMA). A confirmed break below this support could lead to a price drop of 20% to around $1.94. This target is derived from the height of the rising wedge pattern. The range of $2.00 to $2.04 is crucial as it holds significant leveraged long positions, which, if forced to close, could trigger a long squeeze, adding selling pressure and bringing the price closer to the target of $1.94.
On-chain metrics, such as the net unrealized profit/loss (NUPL), indicate that XRP traders are in a 'denial' phase, expecting price increases despite waning momentum. Historically, this phase has preceded major corrections, as seen in 2018 and 2021. If history repeats itself, XRP could face further short-term declines, aligning with bearish technical setups from the double top and rising wedge patterns.
Despite these short-term risks, XRP's long-term charts remain bullish. A potential rally of 45% towards $3.69 by June is possible if a break from a multi-month descending wedge pattern occurs.
However, if XRP falls below the upper trendline of the wedge and loses support at the 20-day and 50-day EMAs, bullish prospects could be invalidated, risking a drop towards $1.75. Long-term projections suggest targets of $5.24 and even $17, based on symmetrical triangle patterns and Fibonacci extensions. Overall, while there are short-term pullback risks, XRP's long-term charts indicate a persistent bullish bias, suggesting that the rally may not be over.