Will XRP price rally as it eyes breakout above descending trendline?

XRP price is close to confirming a breakout from a multi-week descending trendline that could potentially kickstart an uptrend over the coming sessions.

XRP (XRP) price has dropped nearly 17% from mid-February and nearly 43% from its year-to-date high of $2.39. 

XRP has mirrored Bitcoin’s recent move lower, as the bellwether slipped beneath several key support levels while investor appetite for risk assets remained subdued amid rising macroeconomic and geopolitical uncertainty.

XRP price has also been in a downtrend as funding rates softened, while the forced unwinding of leveraged long positions accelerated the drop beyond what spot selling alone would have caused.

The lack of institutional inflows since the beginning of this year also played a part in dampening investor demand for the token this year. SoSoValue data shows that the U.S. spot XRP ETFs drew in $88 million over the past three months, far under the $1.16 billion recorded in the November to December period. 

On the daily chart, XRP price is close to breaking out from a descending trendline that has been acting as a dynamic resistance level since early January. A successful breakout from the pattern has historically been followed by significant bullish momentum. 

At press time, XRP price was trading at $1.36, close to breaking out of the pattern. Notably, $1.36 also marks the bottom of the trading range in Murrey Math lines. The line is considered a key support level for price reversals.

A breakout from this key psychological level could trigger a sharp rally to $1.75, where the top of the trading range for Murrey lines lies, or even to the strong pivot reverse point at $1.95.

On the contrary, failure to break the resistance could extend the downtrend over the coming weeks, potentially towards the strong pivot reverse of the Murrey lines at $1.17, where bulls could look to re-establish a floor.

Nevertheless, concerns tied to the situation in the Middle East remain a key factor weighing on risk appetite at the moment. Although the volatility seen over the weekend has eased somewhat over the past 48 hours, traders are still likely to stay cautious until clearer signs of de-escalation begin to emerge.