Ripple price has been struggling to trade above $0.2000 as of late, ever since it got rejected at the $0.2100 psychological handle. As of this writing, XRPUSD is trading around $0.2053 with technicals on the daily and 4-hour time frames hinting at more downside potential.
For instance, the daily time frame shows that the cryptocurrency is testing resistance around the 200 SMA. If resistance at its current price holds, ripple price could fall to near-term support at $0.1890. Should this happen, a head and shoulders chart pattern will have been completed. When you enroll in our free forex trading course, you will learn that this is widely considered as a bearish reversal indicator. A strong close below this neckline support could signal a potential drop to $0.1390 where XRPUSD bottomed on March 16.
A closer look at the 4-hour time frame also reveals that ripple price is trading below the trendline support (from connecting the lows of May 26, May 28, and May 31). The recent price action of ripple price also shows that the cryptocurrency has been consolidating. Because this follows after a sharp drop, a bearish flag chart pattern has formed which confirms the bearish bias on the daily time frame.
Be Wary of Bulls in XRPUSD
However, take note that nothing in the markets is set in stone. A strong bullish close above the 200 SMA on the daily time frame above $0.2146 would invalidate the head and shoulders pattern. It may indicate that there are still enough buyers left in the market that could push XRPUSD to its April 30 highs at $0.2300.