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XRP (XRP) has experienced a notable increase of 60% in the first quarter of 2023, driven by heightened speculation regarding Ripple’s possible legal victory against the U.S. Securities and Exchange Commission, along with a general optimistic sentiment in the cryptocurrency market.
The XRP/USD pair is now positioned for further gains in the second quarter, largely due to a traditional bullish continuation pattern.
XRP price forms bull pennant
In late March, XRP surpassed its multi-month ascending trendline resistance, avoiding a potential 35% decline. The rebound peaked at $0.58 on March 29, marking its highest point since May 2022.
Currently, XRP has been moving sideways in what seems to be a bull pennant. This bullish continuation pattern emerges when the price consolidates within a symmetrical triangle following a significant rally.
A bull pennant typically resolves when the price breaks above its upper trendline, accompanied by an increase in trading volumes. The breakout target for this pattern is calculated by adding the height of the preceding uptrend (flagpole) to the breakout point.
In simpler terms, a bullish target of $0.65 in Q2 for XRP price represents an increase of approximately 30% from current levels.
XRP/USD daily price chart. Source: TradingView
On the other hand, a decisive close below the lower trendline of the pennant could invalidate the bullish setup and heighten the likelihood of XRP testing its 50-day exponential moving average (50-day EMA; the red wave) around $0.44 as its next downside target.
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Whales accumulate XRP as dollar weakens
The year-to-date increases in XRP price align with a rise in whale accumulation, as per data monitored by Santiment.
Related: Why is XRP price up today?
For example, the amount of XRP held by various whale address cohorts — whether 1,000–10,000 XRP or 100 million–1 billion XRP — has grown alongside its 40% gains in 2023, despite reports of some whales offloading XRP valued at approximately $35 million.
XRP supply distribution among whales. Source: Santiment
At the same time, a declining U.S. dollar has enhanced the appeal of risk-on assets overall, including Bitcoin (BTC), which has maintained a strong correlation with XRP on a daily basis this year.
XRP/USD and BTC/USD daily correlation coefficient. Source: TradingView
In summary, the optimistic outlook for XRP is contingent upon a favorable outcome for Ripple against the SEC in the near future, while a “sell the news” scenario should also be considered.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any choices.
