XRP Shooting Star Bearish Update

In a recent tweet, popular analyst Egrag Crypto analyzed the price action of XRP using technical chart patterns, particularly focusing on a potentially bearish signal: the formation of a “Shooting Star” candle.

A Shooting Star is one of the key bearish reversal patterns, typically seen at the end of an uptrend. Egrag Crypto’s analysis suggests that XRP’s current price behavior could indicate a trend reversal if certain key factors are met.

Understanding the Shooting Star Pattern

A Shooting Star pattern forms when the price moves significantly higher during a trading session but then closes near the opening price, leaving a long upper shadow. This indicates that buying pressure has been rejected at higher levels, signaling a potential reversal in market sentiment.

Egrag Crypto notes that this pattern is forming on the monthly time frame, which adds significance to the signal, given that monthly candles represent longer-term trends.

According to the analyst, the monthly candle must close above $2.93 for this pattern to play out fully. If this level holds, it would suggest that the bears’ influence has not yet taken over, and the uptrend could continue. The next 48 hours will be crucial as traders await the close of the current monthly candle.

Volume Analysis

In addition to the price action, Egrag Crypto stresses the importance of volume in confirming the trend reversal. Volume plays a critical role in confirming the strength of price movements.

If the volume is low, as seen in the current candle, the Shooting Star pattern’s bearish implications are weaker. A higher-than-average volume, however, would signal stronger conviction in the price action and increase the likelihood of a trend reversal.

According to Egrag Crypto, a bullish scenario would emerge if the price closes above the $3 level. This would signify that the buyers are still in control, and the trend is not yet over. In contrast, a close below the current price level could validate the bearish scenario and indicate that a reversal is in progress.

The Role of the SEC Lawsuit and Historical Volume

To further support his analysis, Egrag Crypto examines the volume structure of previous significant events in XRP’s price history, particularly focusing on the SEC lawsuit candle and the price top in April 2021.

He points out that while the volume during those events was much higher than current levels, the volume pattern in the current candle does not yet suggest a topping structure. According to the investor, it would take a “GIGA VOLUME” candle for the market to consider a cycle top seriously.

The analysis also emphasizes that the current volume structure lacks the strength to signal a reversal in a larger time frame. Egrag Crypto concludes that, unless a substantial increase in volume occurs, the price action does not yet indicate the end of XRP’s bullish cycle.

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