XRP price flashes classic ‘hidden bullish divergence.’ Is $5 still in play?

Key points:

XRP (XRP) is flashing a familiar technical pattern that has historically preceded sharp short-term price rebounds.

XRP bulls still focus on $5 despite latest dip

XRP’s three-day chart shows a “hidden bullish divergence,” where the price forms higher lows while the relative strength index (RSI) posts lower lows. In technical analysis, most analysts perceive this pattern as a sign of weakening downside momentum.

Two such divergences appeared in XRP’s recent history.

The first formed in early 2022, leading to a 69% bounce before prices resumed their broader decline. The second emerged between late 2023 and early 2024, preceding a 49% rally that led to the price stabilizing.

Both examples show that XRP often saw quick rebounds after the hidden bullish divergence signal, but those rallies didn’t last long. In other words, this setup can spark short-term gains, but it does not necessarily mean a bullish reversal has begun.

XRP dropped 11.95% in the last 24 hours and was trading for as low as $2.229 on Tuesday.

“I’d be hoping to hold this range and spring back as the week goes on, but the bias is bearish in the moment,” said pseudonymous analyst Guy on the Earth, who spotted the hidden bullish divergence on the XRP charts.

He added:

“$2.20 is next support with the 2025 major support between $1.90 and $2 next up if we lose this range.”

The support area aligns with the lower trendline of XRP’s prevailing symmetrical triangle structure and its 1.0 Fibonacci retracement trendline, as shown below.

The upside target for the symmetrical triangle is around $5 in the event of a breakout, representing a gain of about 115% from the current price levels.

This XRP structure reinforces the bounce setup presented by the hidden bullish divergence.

Over $695 million in XRP shorts at risk

Derivatives data shows a growing imbalance between long and short positions on XRP.

As of Tuesday, XRP’s cumulative short liquidation leverage exceeded $695 million, compared with just $32.1 million in long exposure, according to CoinGlass. It reflects a market heavily tilted toward short positions, signaling growing pessimism among traders.

Most of this short-side liquidity is concentrated between $2.60 and $3.50, suggesting that even a modest rebound toward this range could trigger a cascade of short liquidations, or a potential “short squeeze.”

Meanwhile, there’s little to no long-side liquidity below $2.16, signaling that the long flush has already occurred during the October correction.

Related: Is XRP the new Bitcoin? Why Wall Street can’t stop talking about its ETF

The current setup implies that XRP’s downside risk may be limited in the near term, while upside volatility could intensify if price climbs into the short-heavy zone.

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.