A rally in the XRP (XRP) token rally may have just started, and new all-time highs could be seen for the cryptocurrency in the coming months, says Peter Brandt, an analyst with over four decades of experience tracking commodity markets.
Brandt identified a pattern in XRP’s weekly price chart that he described as a “possible inverted head-and-shoulders with a stunted right shoulder.” XRP has quadrupled this year in price and recently climbed above $1 for the first time since 2018, for a $37 billion market capitalization.
The pattern “would indicate prices a boatload higher” to new all-time highs, Brandt, CEO of Factor LLC, tweeted Friday.
Inverted head-and-shoulders patterns comprise three price troughs, with the middle one being the lowest, and a trendline connecting the high points of the two retracements. A breakout or bullish reversal is confirmed once an asset establishes a firm foothold above the neckline hurdle.
While XRP has already flipped the neckline hurdle of 75 cents into support, a weekly close above (Sunday, 23:59 UTC) is still needed to confirm the breakout.
That would open the doors for a rally to $3.30, the all-time high hit on Jan. 4, 2018, according to data source Messari.
Technical analysis is subjective because there is an art to the science involved in identifying patterns. Hence, sometimes analysts differ on the validity of patterns or interpret similar-looking price structures differently.
According to Katie Stockton, a technical analyst at Fairlead Strategies, the price structure seen on the weekly chart is not a textbook inverted head-and-shoulders formation.
“It does not meet my qualifier of having just three major oversold lows throughout the formation of the pattern,” Stockton said in an email. “There is such a thing as a complex head-and-shoulders, but I think more accurately this can be labeled as a rounded base.”
For an inverted head-and-shoulders pattern to be valid per Stockton, the three troughs need to be accompanied by an oversold reading on an overbought/oversold indicator such as the relative strength index (RSI).
Brandt and Katie differ on semantics but agree on the interpretation. “The takeaway is similarly bullish given the breakout above long-term resistance,” Stockton said, adding that XRP has already achieved the upside price targets.
XRP is currently trading at $1.003, representing a 58% gain for the week – the most since the final week of January, according to CoinDesk 20 data.
Also read: XRP Rises Above $1 for First Time Since March 2018, Despite SEC Shadow
The coin is enjoying the madness of the crowd, Brandt noted. The rally may have received a boost from New York Judge Sarah Netburn’s recent decision to grant Ripple access to the U.S. Securities and Exchange Commission’s (SEC) internal communications on how it determines whether a cryptocurrency is security.
In December, the SEC sued Ripple, CEO Brad Garlinghouse and Executive Chairman Chris Larsen for unlawful selling of $1.3 billion worth of XRP to the general public.