Key Points:
The hidden bullish divergence on the XRP chart may provide some breathing room for bulls.
If the price rebounds, over $695 million in XRP short positions may face a squeeze.
XRP is presenting a familiar technical pattern that has historically indicated a sharp price rebound in the short term.
The three-day chart of XRP shows a "hidden bullish divergence," where the price forms higher lows while the Relative Strength Index (RSI) forms lower lows. In technical analysis, most analysts view this pattern as a signal of weakening downward momentum.
There have been two such divergences in XRP's recent history.
The first occurred in early 2022, followed by a 69% rebound, after which the price resumed a broader downtrend. The second appeared between late 2023 and early 2024, leading to a 49% rebound that stabilized the price.
Both cases indicate that XRP typically experiences a quick rebound after the hidden bullish divergence signal appears, but these recoveries do not last long. In other words, this pattern may trigger a short-term rise but does not necessarily mean a bullish reversal has begun.
XRP has dropped 11.95% in the past 24 hours, with Tuesday's trading price falling to $2.229.
Anonymous analyst Guy on the Earth, who identified the hidden bullish divergence on the XRP chart, stated: "I hope to hold this range and rebound later this week, but currently, the market leans bearish."
He added:
This support area aligns with the lower trendline of XRP's current symmetrical triangle structure and its 1.0 Fibonacci retracement trendline, as shown in the chart below.
The upside target for the symmetrical triangle is approximately $5 in the event of a breakout, representing about a 115% increase from the current price level.
This XRP structure reinforces the rebound pattern presented by the hidden bullish divergence.
Derivatives data shows a growing imbalance between long and short positions in XRP.
According to CoinGlass, as of Tuesday, the cumulative short liquidation leverage for XRP exceeded $695 million, while long exposure was only $32.1 million. This reflects a severe market bias towards short positions, indicating that trader pessimism is increasing.
These short liquidations are primarily concentrated between $2.60 and $3.50, suggesting that even a moderate price rebound to this range could trigger a chain reaction of short liquidations, potentially leading to a "short squeeze."
Meanwhile, there is almost no long liquidity below $2.16, indicating that long liquidations have already occurred during the pullback in October.
The current situation suggests that XRP's short-term downside risk may be limited, and if the price rises to the short concentration area, upward volatility could intensify.
Related: Is Ripple (XRP) the new Bitcoin (BTC)? Why Wall Street is buzzing about its ETF.
This article does not constitute any investment advice or recommendation. All investment and trading activities carry risks, and readers should conduct their own research before making decisions.
Original article: “Ripple (XRP) Price Shows Classic 'Hidden Bullish Divergence' Pattern, Is the $5 Target Still Viable?”
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