XRP built a bullish hammer candlestick pattern level yesterday as the cryptocurrency complex experienced a new wave channel of selling pressure. Today, Ripple XRP is endeavoring to continue the rebound, but it needs a daily close above the hammer candlestick high to trigger a unique trading opportunity for investors.
The once prevailing optimistic Ripple XRP price outlook failed to materialize when the digital asset declined below the lower trend line level of a bear flag pattern. The Ripple XRP pattern’s measured moved target is at $0.432, offering stubborn market operators an opportunity to lose 53% from the June 5 breakdown. The measured move price target is calculated using the length of the flagpole. A drop of that magnitude leaves Ripple price entrenched in the legal uncertainty price range that followed the November 2020 high into the December 2020 low.
However, yesterday, Ripple's price successfully defended the critical November 24, 2020, high at a price of $0.780, constructing a bullish hammer candlestick pattern level that may trigger today with a close above the high at the price of $0.887. It was the third successful test of the $0.780 since May 29, underlining the importance of the support level in the broader outlook for Ripple.
If the hammer pattern level triggers today, it should motivate Ripple XRP price to revisit the psychologically important $1.00, a support level that has been equally instructive for the price action since May 24. A defeat of $1.00 will stimulate XRP to challenge the flag’s lower trend line at $1.058, representing a 20% gain from the current XRP price. Ripple price could potentially test the declining 50-day simple moving average at a price of $1.219 before introducing a pullback.
An ambitious target is the confluence of the flag’s upper trend line at a price of $1.306 with the 50% retracement level of the April-May decline at $1.307.
Downside risk begins with a daily close below the price of $0.780. The next XRP price support level is the 200-day SMA at $0.661 and the May 23 low at $0.652. Any weakness beyond there imposes a difficult challenge for XRP price recovery any time soon.
A negative sign for the originating bounce is the bear flag forming on the Santiment XRP 365- day Market Value To Realized Value (MVRV) metric. The MVRV metric measures the average profit/loss of all Cryptocurrency that moved within the last 365 days, with negative values highlighting undervalued conditions and positive values showing overvalued conditions.
In the case of the 365-day MVRV, the bear flag could be a warning that Ripple XRP remains overvalued and could face renewed selling pressure below
XRP MVRV ratio 365 days sentiment
Ripple price is a crossroads, boxed in by the $0.780 support and the range around the psychologically important $1.00. Until there is a meaningful close below or above those support levels, Ripple XRP is only positioned for tactical opportunities. Investors need to be precise with their entries around support and resistance levels in this environment and use daily closes to dictate longer-term capital allocation.
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