Trader says XRP price setting ‘biggest bear trap’ after June monthly open
XRP (XRP) dropped to $1.25 on Tuesday after a market-wide sell-off, erasing all the gains made since early February.
Key takeaways:
- XRP fell to $1.25 after a broader market sell-off, testing a long-term trend line and the 50-month exponential moving average support area.
- Support weakness has traders looking at $1 and under next, while optimists see a "bear trap" forming.
- June has historically been a weak month for XRP, with traders increasing bets on a drop below $1.20.
XRP price action teases "bear trap"
Data from TradingView shows that the XRP price opened June at $0.33, just below the 50-month exponential moving average (EMA).
More importantly, XRP is also trading “directly on/slightly below the White MACRO Trend Line,” analyst Egrag Crypto in a Monday post on X, referring to the multi-year ascending trend line that has supported the price since 2017.
Related:
In previous instances, when XRP opened the month below the 50 EMA during macro drawdowns, the “structure often begins to form a bottoming zone,” as shown in the chart below. Currently, the price is trading below the macro trend line. The price might wick below it before recovering, as seen in 2020, 2023 and 2024.
“The market is leaning heavily bearish,” Egrag Crypto said, adding:
“If XRP reclaims the 50 EMA and the Macro trend line, this setup could become one of the biggest bear traps of the cycle.”
XRP/USD 1-month chart. Source: X/Egrag Crypto
For analyst ChartNerd, a target for new local lows lay at around $0.70-$0.90.
“Many of you admire this beautiful $XRP fractal, which leaves the door open to a $0.90/$0.70 XRP before any major reversal,” the trader alongside a chart showing a potential bottoming zone for XRP.
XRP/USD monthly chart. Source: X/ChartNerd
Fellow analyst Kamile Uray $1.26-$1.30 was an important support zone, which bulls were required to defend to prevent a deeper correction toward $0.94-$1.11.
XRP/USD daily chart. Source: X/Kamile Uray
As Cointelegraph reported, XRP could drop to retest the Feb. 6 low of $1.11 and then the psychological support at $1 after the $1.27 support was broken.
June is usually a bad month for XRP
Unfortunately for the bulls, XRP tends to struggle in June. Since 2014, the price has closed in the red for eight of the past 12 months, with average returns of about −5%.
The June losses were even more pronounced in years where XRP closed May in the red, according to data from Cryptorank.
XRP monthly returns. Source: Cryptorank
The chart above shows that the losses are significantly higher in bear cycles, such as 2018’s -23.8% and 2022’s -21.5%.
The -34.4% drop in June 2021 is an outlier due to the US Securities and Exchange Commission’s lawsuit against Ripple, which took a toll on XRP price for years.
If history is anything to go by, XRP’s price action could continue trending lower in June, with a possible recovery beginning in July.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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