Ripple (XRP) and Stellar (XLM), two American-made cryptocurrencies, have been under pressure over recent months, entering a bear market. The XLM price has dropped to $0.2537, a decline of over 60% from its peak in December.
Similarly, the XRP price has plummeted from a high of $3.40 in January to its current level of $2.10, resulting in billions of dollars in losses. This article examines why the prices of XLM and XRP are poised to surge by double digits in the near term.
XRP Price Has Formed a Rare Bullish Pattern
Recently, a prominent theme in the cryptocurrency market has been the formation of a head-and-shoulders pattern in the XRP price. This pattern had a head at $3.40, the two shoulders at $3.00, and the neckline at $1.9275.
An H&S pattern is often one of the most well-known bearish indicators in technical analysis. This pattern still remains and will be invalidated if the XRP price jumps above the shoulder section at $3.40.
However, the Ripple coin has now formed a bullish falling wedge pattern, shown in blue. This pattern consists of two falling trendlines, with the upper one connecting the higher highs and the lower one connecting the lower lows. A bullish breakout normally happens when the two lines are about to break out.
The XRP price has also formed a small bullish flag pattern, suggesting a strong bullish breakout is likely in the coming weeks. If this occurs, the next level to watch will be the psychological mark of $3.
The risk is that another drop below the neckline at $1.9275 will validate the H&S pattern and indicate further downside to $1.1820.
XLM Price is Showing Signs of Bottoming Out
Meanwhile, XLM shows signs of bottoming out after a double-digit drop from its peak in December.
Like XRP, it has formed a falling wedge pattern that is shown in black. It has already moved above the upper side of the wedge, a sign that it has staged a bullish breakout.
At the same time, the coin has formed a bullish divergence, as indicated by the upward movement of the Relative Strength Index (RSI) and the Awesome Oscillator (AO). The AO indicator is about to move above the zero line.
Unlike XRP, XLM has not formed a head-and-shoulders pattern, which means it has a higher chance of surging. If this occurs, the next price to watch will be $0.4100, a 70% increase from the current level.
Ripple and Stellar Have Fundamental Catalysts
In addition to their strong technicals, the XLM and XRP prices have other catalysts that may trigger an upside.
They are both large players in the cross-border payments industry, a sector that is expected to surge in the long term. Ripple is better positioned for growth as it aims to become a stronger rival to SWIFT. With its legal issues resolved, Ripple has the opportunity to establish agreements with banks to strengthen its payment network.
There are higher chances that the SEC will approve the recently applied-for ETFs. Such a move is likely to increase demand for the XRP and XLM tokens from institutional investors.
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