XRP is again making headlines as a leading technical analyst has picked out a crucial area for the short-term market structure of this cryptocurrency. After a ‘triple tap’ pattern, which propelled the price to the top of a trading range, it now appears that a liquidity sweep at the level of resistance has been completed.
Triple Tap Pattern Reaches Its Objective
As per technical analysis provided by CredibleCrypto, the recent action in XRP involved a formation of the type known as a triple tap, which occurs when the price tests a resistance level several times prior to making a move.
Such a formation typically provides liquidity at the level of a range high, which seems to be the case here. However, the absence of buy-side liquidity means the current state of the market is at a crossroads.
The implication of this completed pattern is that the initial upside breakout was more of a technical breakout, as it was based on positioning rather than a breakout confirmation.
Also Read: Ripple (XRP) Price Analysis: Bulls Eye Strong Breakout Toward $4.20
Scenario One: Relief Bounce Followed by Local Pullback
The initial scenario described is corrective. In this particular case, XRP’s interaction with resistance would be considered a relief bounce as it is part of a larger scale uptrend. Once it gains liquidity at highs, it would be expected to drop as it is expected to maintain a short-term downtrend.
Under this result, XRP could return to the area below $1.77, which was a support area before. Such an event does not necessarily negate the bigger bullish pattern but rather suggests that some additional consolidation or pullback might be required before any positive attempt.
Scenario Two: Structural Demand Base Forms
However, the alternative scenario is more positive for the bull camp. In this case, the formation of the triple tap pattern is taken as the creation of a structural demand base. In this scenario, any move towards the $1.77 level would be met with buying actions, which in turn serves as a defended level.
Provided this trend continues, XRP may start moving upwards, targeting areas of unexplored liquidity and previous highs above the existing range. This would indicate that the market has adapted to the price levels and is ready to move further instead of correcting.
Broader Market Context Favors Upside Bias
As the analyst observes, the current environment, the overall market, as well as the Bitcoin structure, are favoring the second scenario. When the Bitcoin market is stable or constructive, the chances of the major cryptocurrencies such as XRP maintaining their levels during a possible rise are high.
This means that the bias will be to search for long setups during pullbacks, as long as XRP maintains respect for its structural lows.
Also Read: XRP Set to Repeat 2017 Breakout, Could Surge Over $16.5 with 663% Upside
