- XRP price has retraced to a crucial support barrier at $1.42.
- On-chain metrics like Network Profit and loss and MVRV suggest a reset due to recent crash.
- A bounce from the demand zone extending from $1.33 to $1.40 could trigger a 40% bull rally.
XRP price shows the promise of a bull rally that could create new yearly highs. This move comes after Ripple tested a critical support barrier.
XRP price looks to bounce
XRP price has dropped nearly 10% in a previous 4-hour candlestick to test the head-and-shoulders pattern’s neckline at $1.42.
This setup contains three swing lows, with the central dip referred to as the head, while the other two of comparable depths are known as shoulders. The swing highs of these peaks can be connected using trend lines to form a horizontal resistance at $1.42, known as a neckline.
A decisive close above $1.42 forecasts a 35% upswing, which is the distance between the neckline and head’s low. Adding this measure to the horizontal resistance yields a target at $1.98.
After breaking out of this pattern on April 30, the remittance token surged 19% but faced rejection around $1.65, which has resulted in a 15% crash to $1.42, where XRP price currently trades.
If the buyers join hand, XRP price could skyrocket 40% to $1.98 after slicing through the supply barrier at $1.65.
XRP/USDT 4-hour chart
Supporting this upswing is the reset of Ripple’s Network Profit and Loss (NPL) indicator, which calculates the overall return across all daily transactions. Hence, a spike in this metric coincides with the possibility of a local top.
This fundamental index surged on May 1, representing the initial rejection at $1.65. Following this, May 3 also saw a sudden uptick in NPL, suggesting that many addresses were in profit, opening up the possibility of investors booking profits.
At the time of writing, this metric has reset to zero, paving the way for more upswings.
%20[10.05.43,%2004%20May,%202021]-637557010800947457.png)
XRP network profit and loss chart
The same events transpired with Santiment’s 30-day MVRV model, which tracks the network’s profit/loss for addresses that purchased XRP in the past month.
This metric is also resetting after hitting a local top at 0.238%, indicating that a bullish upswing could be around the corner.
%20[09.14.58,%2004%20May,%202021]-637557011059855076.png)
XRP 30-day MVRV chart
Regardless of the pattern, if the bearish momentum slices through $1.31, then the optimistic scenario around XRP price will face invalidation. In that case, Ripple could slide 11% to test the subsequent support at $1.16.
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