XRP Price Rally Needs to Absorb 1.2 Billion Tokens, but Buying Power Is Fading
XRP price trades at $1.33 on April 6, up 3% over the past 24 hours, but sitting inside a developing head and shoulders pattern on the daily chart. The right shoulder is forming, and any rally from here needs to push through a 1.24 billion token supply wall overhead. The problem is that the buying The post XRP Price Rally Needs to Absorb 1.2 Billion Tokens, but Buying Power Is Fading appeared first on BeInCrypto .
On April 6, the XRP price has experienced a 3% surge over the past 24 hours, trading at $1.33. However, this rally is taking place within a developing head and shoulders pattern on the daily chart, which raises questions about its sustainability. The right shoulder of the pattern is currently forming, and any further price increase from this level must overcome a significant resistance point: a 1.24 billion token supply wall located overhead.
The challenge for XRP's bullish momentum lies in the diminishing buying pressure that has halved since late March. This reduction in demand raises concerns about whether the current price bounce has enough fuel to absorb the supply or if it will simply complete the bearish pattern.
The daily chart clearly illustrates the head and shoulders structure. The left shoulder formed in late February, the head reached its peak near $1.60 in mid-March, and the right shoulder is now developing as XRP consolidates around $1.33. The neckline of the pattern is situated near $1.26. If the price were to break below this level, it would trigger a potential 19% downward move.
Before the bearish pattern can be invalidated, XRP must reclaim two Exponential Moving Averages (EMAs), which are trend indicators that place greater weight on recent price action. The 20-day EMA is currently at $1.35, and the 50-day EMA is at $1.42. The last time the 20-day EMA was cleanly reclaimed was on March 13, after which prices rallied 15.26% and also recaptured the 50-day EMA.
For XRP to demonstrate short-term strength, a daily close above $1.35 would be required to reclaim the 20-day EMA. However, any price peak that remains below the head at $1.60 will continue to be part of the head and shoulders structure, increasing the risk of the right shoulder forming rather than breaking the pattern.
The supply data provides crucial insights into the resistance level as the shoulder develops and highlights the difficulty of absorbing it. The Cost Basis Distribution Heatmap, which maps the price at which XRP supply was last acquired, reveals that the resistance begins at this point. This means that any price increase must overcome this substantial supply wall, which could be challenging given the fading buying power.
In conclusion, the XRP price rally is currently facing significant resistance as it attempts to absorb 1.24 billion tokens. While the price has risen by 3% in the past 24 hours, the diminishing buying pressure raises doubts about the sustainability of this rally. To break out of the head and shoulders pattern, XRP must reclaim key EMAs and overcome the 1.24 billion token supply wall. However, the fading conviction among buyers could make this task more difficult than anticipated.
