XRP (XRP) forms a double top and rising wedge, signaling short-term downside risk toward $1.94.

NUPL indicates traders are in denial, resembling past pre-crash phases.

Key takeaways:

XRP is forming a double top and a rising wedge, which could lead to a short-term downside move toward $1.94.

The NUPL indicates that traders are in a "denial" phase, which has coincided with major corrections in the past.

Long-term charts are still pointing to bullish targets in the Fib extension levels, which are at $3.69 and $17.

XRP (XRP) has managed to rise by more than 50% in a month after forming a local low at $1.80. The cryptocurrency is now trading at around $2.5k, having faced selling pressure at the $2.65 resistance.

Improving risk appetite and prospects of an “altseason” have helped boost the cryptocurrency further in recent days. But could XRP rally further from current levels or risk a pullback in the coming days? Let’s examine.

XRP 'double top' pattern hints at a possible sell-off

XRP formed a double top pattern near the $2.65 resistance, which signals a possible trend reversal. The pattern includes two clear peaks and a neckline around $2.47.

After hitting the second peak, XRP dropped and fell below the neckline, confirming the double top pattern. A confirmed breakdown below this level puts the downside target at around $2.30.

The double top suggests that buying momentum is weakening after a strong rally, especially if buyers fail to break above the $2.65-$2.7 preference. If the pattern holds, it increases the chances of seeing further downside.

Rising wedge signals a 20% price crash

XRP also broke down from a rising wedge pattern, which could indicate a shift from bullish to bearish momentum. Recent attempts to break above the pattern’s upper trendline have failed, and the same is evident from the Relative Strength Index (RSI) readings on the 4-hour chart.

A wedge breakdown is usually confirmed when the price falls below its lower trendline, which XRP appears to be attempting to do now. The cryptocurrency is testing the support of the 50-4H exponential moving average (50-4H EMA; the red wave).

Breaking below this support increases the chance of XRP falling another 20% to around $1.94. This level comes from measuring the height of the rising wedge pattern and subtracting it from the breakdown point.

The $2.00-$2.04 range is also important because it holds a large number of leveraged long positions, which are valued at around $50 million according to data resource CoinGlass.

If XRP drops below this range, many of these positions could be forced to close, causing a long squeeze. That would add selling pressure and push the price closer to the $1.94 target.

The NUPL indicates that traders are in 'denial'

Shifting the focus to onchain data, XRP’s Net Unrealized Profit/Loss (NUPL) has shifted into the Belief/Denial zone, shown in green on the Glassnode chart below. When in denial, many still expect prices to rise, even as momentum fades.

This NUPL level has historically marked the early stages of major corrections. For example, XRP entered this phase before sharp declines in 2018 and 2021.

If history repeats, XRP may face more downside in the short term, paving the way toward the price targets highlighted by the double top and rising wedge technical setups.

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