XRP Price Remains Above $2, Forming a Pennant: Is a Bottom on the Horizon?

Ripple's XRP is currently holding above the crucial $2.00 support level, shaping a pennant formation. This setup suggests a potential bottom could be forming, signaling the possibility of a significant price breakout.

Key Takeaways

XRP is consolidating above the $2.00 support level, indicating potential bottom formation.
A pennant structure has developed, following a period of volatility.
Successful breakout above $2.30 to $2.40 could lead to a rally toward $2.62.
Conversely, closing below $2 would invalidate the bullish pattern and may trigger further declines.

XRP price trades in a pennant formation hinting a bottom.

XRP Price Technical Analysis

XRP price consolidates above $2 in a pennant formation: Bottom forming? - 1
XRPUSD (1D) Chart, Source: TradingView

XRP has recently seen two significant tests of the $2 support level, highlighting its importance in the current market landscape. After the first retest, XRP displayed resilience, and now it is undergoing a second test, forming the lower boundary of the emerging pennant.

This pattern indicates a state of balance following a recent period of significant price drop. It is typical for such formations to appear after capitulation events, as the price compresses before a breakout occurs in either direction.

The upper boundary of this pennant is close to the resistance zone found between $2.30 and $2.40. A successful breakout above this range could enable a rally toward $2.62, which represents vital high-timeframe resistance needed for a bullish trend to resume.

On the other hand, if XRP closes below $2, this would nullify the pennant pattern and expose the market to lower liquidity levels, increasing the risk of a deeper sell-off.

A pennant that forms directly above major support is often considered a potential indication of a bottom, provided the support level holds firm. Currently, XRP is nearing the midpoint of this structure, but the apex of the pennant isn't anticipated until late Q4. This suggests that the cryptocurrency may remain in a consolidating phase for several weeks before a meaningful price movement occurs.

Volume has been gradually decreasing during this consolidation phase, which is typical behavior for such patterns. An increase in volume will likely be the first hint of the breakout direction.

Anticipated Price Action Ahead

If the $2 support holds strong and we see bullish volume increase, XRP may begin its breakout towards $2.62 and possibly beyond. However, any loss below $2 in closing prices would invalidate the bullish outlook and could expose XRP to lower liquidity levels.