#BTCPullback
XRP Shows Hope for a 17% Breakout but 1.5 Billion Tokens Become an Obstacle
The XRP price has given several breakout signals at once, but there is a wall of 1.5 billion tokens at the break-even level blocking the 17% rally target.
The cup and handle pattern has just broken out, and standard bullish divergence is triggering a trend reversal.
Meanwhile, a bullish crossover potential may be forming. Although technical setups look promising, on-chain data shows a different picture.
Breakout of Cup and Handle Confirmed by Bullish Divergence
XRP was moving within a cup and handle pattern from March to early May. The ‘cup’ formed from March 23 to April 17, while the ‘handle’ consolidated from April 17 to May 2. After that, the handle breakout above the descending channel occurred on May 2.
The initial breakout had a clear trigger.
Specifically, the Relative Strength Index (RSI), a momentum indicator, showed a positive setup on the daily chart. Between February 7 and April 29, XRP’s price formed a lower low while RSI formed a higher low. This pattern is a standard bullish divergence, usually indicating a trend reversal at the end of a downtrend. This divergence appeared on April 29, and the cup and handle breakout happened three trading sessions later on May 2. As of April 29, XRP had already risen more than 6%.
Besides divergence, the technical setup has other support. Currently, XRP is trading above the exponential moving average
E
EMA
20-day—an indicator that has recently been more pressure on the price to measure short-term momentum—at US$1.400 and the 50-day EMA at US$1.408. Importantly, these two lines are getting closer. If a bullish cross occurs with the 20-day EMA crossing above the 50-day EMA, it would confirm a change in short-term momentum.
In comparison, the last time XRP broke above the 20-day EMA, on April 13, this movement triggered an 11.43% rally that pushed the price above the 50-day EMA as well. The current setup is similar, with a confirmed breakout and EMA crossover approaching.
Technically, the reasons for the breakout are already in place. However, on-chain data paints a different picture.
However, 1.5 Billion XRP at the Break-Even Level Becomes an Obstacle
The biggest test for this breakout lies in two on-chain signals that complement each other.
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First, exchange flow data has changed. XRP’s Exchange Net Position Change has increased since yesterday. This metric monitors the net flow of XRP into and out of exchange wallets, with positive numbers indicating tokens moving to exchanges, usually for sale. Specifically, this number rose from about 37 million XRP on May 4 to about 46 million XRP on May 5. As a result, this acceleration indicates selling pressure is starting to emerge amid price strength.
Second, the Cost Basis Distribution Heatmap shows where these sales are most concentrated. Data from Glassnode indicates a cluster of 1.57 billion XRP accumulated in the range of US$1.41 to US$1.42. With XRP’s current price at US$1.43, this cluster is slightly below the spot price. Importantly, holders who bought in this cluster are near break-even, and the break-even group has historically been the largest source of supply when prices rise.
Besides the lower cluster, the next important cost basis cluster is in the US$1.47 to US$1.48 range, where 414 million XRP are accumulated. If XRP’s price breaks through the lower cluster without large sell-offs, the next test is at this upper cluster. Therefore, both clusters need to be absorbed for the breakout to continue smoothly.
This setup has two possible outcomes. If holders at US$1.41 to US$1.42 choose to break even and exit, the handle breakout will lose strength. Conversely, if they hold, the path to the next major resistance will open.
XRP Price Levels That Will Determine the Next Direction
XRP
XRPUSD
is trading at US$1.430, with the nearest resistance zone at US$1.435, the 0.382 Fibonacci level. This area is the first obstacle to overcome to confirm the breakout.
First, a daily close above US$1.435 will confirm that the breakout is strong enough to break through the lowest cost basis cluster and open the door to US$1.462 (Fibonacci 0.5) and US$1.490 (Fibonacci 0.618). After that, a clean break above US$1.490 will surpass the second cost basis cluster in the US$1.47 to US$1.48 range and pave the way toward US$1.529 (Fibonacci 0.786) and the floating neckline at US$1.551.
Above the neckline, a daily close above US$1.551 activates the measured-move target from the cup and handle pattern. This pattern estimates a potential increase of about 17% toward US$1.811. The path between US$1.551 and US$1.811 passes through Fibonacci 1.0 at US$1.579 and Fibonacci extension 1.618 at US$1.723.
On the other hand, support levels are relatively close. Holding the price at US$1.401, the 0.236 Fibonacci level, will keep the cup and handle structure intact. But if the price breaks below US$1.401, XRP is likely headed toward US$1.345 as the next major support. Below US$1.345, the path opens toward US$1.277 as a long-term floor. If it breaks below US$1.277, the cup and handle pattern will be completely invalid.
Ultimately, these level calculations are binary. A confirmed close above US$1.551 will open the door to US$1.81. A close below US$1.278 will invalidate the breakout setup.
