Long positions worth $142 million poured in...XRP falls 11% into a double top trap, 'red flag'

▲ XRP/AI Generated Image

XRP failed to rise twice near $1.50, signaling a double top warning. While new long positions rapidly increased in the derivatives market, buying by long-term holders slowed down. Analysis suggests that if the price breaks below the $1.34 neckline, it could fall to $1.19.

BeInCrypto reported on May 11 (local time) that XRP formed a classic double top pattern on the 12-hour chart after failing to break the $1.50 resistance line twice in the past three weeks. The first peak formed at $1.50 on April 17, and the second peak formed at $1.51 on May 10. Both instances saw a sharp pullback after failing to rise at similar price levels.

According to the article, a hidden bearish divergence was also detected in XRP's daily Relative Strength Index. Between mid-February and May 10, XRP's price formed lower highs, but the Relative Strength Index formed higher highs. BeInCrypto explained that a hidden bearish divergence appearing in a downtrend can be interpreted as a signal confirming the continuation of the bearish trend rather than a trend reversal.

XRP has risen 7.5% in the last 30 days, but it has fallen 21% since the beginning of the year. BeInCrypto analyzed that the larger trend remains bearish, and the current attempt to recover near $1.50 may be closer to a relief rally than a trend reversal.

While the charts were sending bearish signals, the derivatives market moved in the opposite direction. XRP open interest increased from $798 million on April 29 to $940 million on May 11. During the same period, the size of newly established long positions was tallied at $142 million. Funding rates also surged approximately 12 times, from 0.000503% on April 29 to 0.006%.

BeInCrypto assessed this combination as an unusual trend. This is because bullish investors are increasing leverage at a time when the charts show a structure close to distribution selling. It was pointed out that even a small dip in price could fuel a cascade of liquidations for excessively accumulated long positions.

Buying by long-term holders also weakened. An indicator tracking the daily net position change of long-term holders recorded its highest accumulation in the last 30 days at 260.18 million XRP on April 12, but it decreased to 152.60 million XRP on May 10. The decrease was approximately 41%. BeInCrypto analyzed that the cooling of buying by long-term holders while prices were rising weakens the defensive strength of spot demand.

Currently, XRP price is trying to hold major short-term support near $1.44. Based on Fibonacci levels, $1.46, $1.44, and $1.42 were presented as immediate support zones. Below that, $1.40 and $1.37 are the next areas of interest, and the neckline of the double top pattern is $1.34.

If XRP falls below $1.34, the double top pattern will be confirmed, and based on the measured target, it could drop 11.09% to $1.19. Conversely, if it clearly closes above $1.51 on a 12-hour candle, the double top structure will be invalidated, and the next test will move to $1.54. XRP is currently at a directional crossroads between recovering $1.51 and breaking below $1.34.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*