Popular crypto analyst Egrag Crypto examines XRP's technical analysis, highlighting the formation of a 'Shooting Star' indicating a possible trend reversal. Let's delve into the details of this analysis.
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. The analyst notes that this pattern is forming on the monthly time frame, adding significance to its signal. A monthly candle close above $2.93 suggests that the bears' influence has not yet taken over, and the uptrend could continue.
Volume Analysis
Egrag Crypto emphasizes the importance of volume in confirming a trend reversal. Volume plays a critical role in confirming the strength of price movements. Low volume in the current candle weakens the bearish implications of the Shooting Star. However, higher than average volume would signal stronger conviction in price action and increase the likelihood of a trend reversal. A bullish scenario would emerge if the price closes above $3, indicating that buyers are still in control.
Role of SEC Lawsuit and Historical Volume
To support his analysis, Egrag Crypto examines the volume structure of previous significant events in XRP's price history. He highlights that the volume during those events was much higher than current levels, and the current volume pattern does not suggest a top structure. According to the analyst, it would take a 'GIGA VOLUME' candle for a cycle top to be considered seriously. The current volume structure lacks the strength to signal a larger time frame reversal.
Egrag Crypto concludes that without a substantial increase in volume, the price action does not yet indicate the end of XRP's bullish cycle.
