XRP price crashed to a crucial support level on Monday morning, signaling that bears are about to prevail and push it lower. Ripple plunged to a low of $1.9522, an essential support level where it has failed to move below several times since November last year. It has now retreated by 42% from its highest point this year.
XRP Price is at Risk of Having a Meltdown
There are three main reasons why the Ripple price is at risk of having a meltdown if it loses this crucial support level.
First, this support is significant since it is the neckline of the head and shoulders pattern, a popular bearish sign. This pattern comprises a head, two shoulders, and a neckline. A strong bearish breakout is usually confirmed when it drops below the neckline, which is about to happen.
The distance between the head and the neckline is 42%. Measuring that same distance from the neckline indicates an XRP price target of $1.1162, its lowest level since November of last year.
Second, there are signs that the XRP price has been in the Wyckoff Distribution Phase. This phase is usually characterized by sideways movements, preliminary supply, buying climax, automatic reaction, upthrusts, and the last point of supply. It is then followed by a breakdown, which ushers in the markdown phase.
READ MORE: Buy, Sell, Hold? XRP Price Prediction Reveals Key Targets
Ripple Price to Form Death Cross Pattern
The other risk is that the Ripple price is about to form a death cross, which happens when the 200-day and 50-day Weighted Moving Averages (WMA) cross each other. The spread between these averages has continued to narrow, meaning another leg down may lead to more downside.
The death cross can trigger a substantial meltdown in stocks and crypto. For example, in November, the last time the XRP price formed a golden cross—the opposite of the death cross—the coin staged a near 500% surge.
Still, all hope is not lost. Firstly, XRP has not yet moved below the neckline of the head and shoulders pattern. Also, it has not moved below the key support at $1.800, the false breakout on February 3rd.
The bearish breakdown will become invalidated if the XRP price moves above the right shoulder at $3. A move above that level will point to more gains, potentially to the YTD high of $3.4. Indeed, most traders on Kalshi expect the coin to end the year above $3.4.
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