The XRP price rally over the past few days is now at risk of exhaustion as a traditional bearish reversal pattern comes into view.
The price of XRP (XRP) jumped by nearly 4.25% to $0.461 on May 17, its highest level in over a week after Ripple scored a small win in its legal battle versus the U.S. Securities and Exchange Commission (SEC).
The XRP gains appeared despite the broader cryptocurrency market, led by Bitcoin (BTC) and Ether (ETH), seeing modest losses of 1% in the past 24 hours.
Ripple scores a small win versus SEC
The XRP/USD pair hourly chart below shows exactly when XRP price decoupled from the rest of the crypto market.
XRP price noticeably jumped when former defense attorney James K. Filan tweeted a copy of a May 16 judgment concerning the legal battle between Ripple and the SEC.
#XRPCommunity #XRP #SECGov v. #Ripple BREAKING: Judge Torres denies the SEC’s Motion to Seal the Hinman documents.https://t.co/wiatz4vCHL
— James K. Filan (@FilanLaw) May 16, 2023
Notably, U.S. District Judge Analisa Torres denied the SEC’s motion to seal the agency’s internal communications that occurred after a speech by its former chairman, Willian Hinman, in June 2018. In that speech, Hinman argued that Ethereum’s Ether token is not a security asset.
The judgment could push Ripple toward a legal win, given its ability to prove that XRP is not a security.
Meanwhile, Ripple’s apparently increasing chances of winning have likely led XRP to rise 10.5% since May 16 despite a broader downside sentiment in the market.
BREAKING: $XRP price surges after Judge Torres denies SEC’s Motion to Seal the Hinman documents, and holds off on #Ripple vs. #SEC verdict, awaits Congress for a regulatory roadmap. pic.twitter.com/JlS0JGBCVR
— WhaleWire (@WhaleWire) May 16, 2023
For instance, trading volumes for XRP-related pairs on Binance surged by more than 200% in 24 hours as the price rallied, suggesting that the move could have momentum behind it.
What’s next for XRP price?
However, technicals are starting to lean bearish with XRP positioned for a potential price correction in May.
The bears will argue that the so-called Gravestone Doji on XRP’s March 17 candle was confirmed by a long upper wick and a minor distance between the token’s open and low points. Traditional analysts see a Gravestone Doji candle as a bearish reversal pattern.
In addition, XRP faces downside pressure from its 50-day exponential moving average (50-day EMA; the red wave) near $0.454 and a short-term descending trendline resistance. In the case of a pullback, XRP will likely see the next significant support at $0.42 in May, down 5.5% from current price levels.
Related: Defending against SEC to cost Ripple $200M, CEO Brad Garlinghouse says
Conversely, a decisive break above the resistance confluence will push XRP price toward $0.50 as its next target by June.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.