Ripple price has failed to sustain its gains above the $0.2000 psychological handle. More than its recent downtick, however, the bigger picture shows that there could be more downside potential ahead of XRPUSD.
On the daily time frame, it can be seen that the cryptocurrency has made lower highs after a series of higher highs. Consequently, a head and shoulders chart pattern has formed. When you enroll in our free forex trading course, you will learn that this is considered a bearish reversal indicator. Another important technical setup to point out is that the head and shoulders chart pattern materialized at the 50% Fibonacci retracement level (when you draw the Fibonacci retracement tool from the high of February 15 to the low of March 13.
A strong bearish close below the low of May 25 at $0.1750 could effectively break the neckline support. With this, a potential sell-off could happen. Ripple price could then fall to its March 14 lows at $0.1140.
Alternatively, a strong bullish run beyond the falling trendline (from the high of May 18, May 19, May 20, May 22, and May 24) would invalidate the head and shoulders pattern. Should this happen, we could see XRPUSD rally to $0.2080.