XRP's Falling Wedge Pattern May Trigger Deeper Pullback Before Rally. What Traders Should Watch

XRP’s recent price action near $2.06 tells a story that many traders might misinterpret. Rather than signaling weakness, the current consolidation structure suggests the market is preparing for a more substantial move upward—but only after completing one critical phase first.

The Technical Consolidation Framework

Since XRP’s all-time high of $3.65 in 2021, price action has evolved through several distinct phases. The initial correction took shape as a descending triangle, gradually compressing volatility until it released into a sharp capitulation in October. This liquidation event served an important function: it cleared excessive leverage positions and reset market momentum.

Following that flush, price stabilized and retested key support and resistance levels, confirming that the broader structure remained intact. Rather than collapsing further, selling pressure gradually weakened—a sign that was easy to miss for those focused solely on short-term declines.

The Falling Wedge Pattern: Compression Before Expansion

As consolidation deepened, a falling wedge pattern emerged on XRP’s chart. This formation typically appears when volume declines and momentum compresses within two converging trendlines. The pattern carries particular significance because it often resolves to the upside—not because of hope, but because of how market microstructure actually works.

The falling wedge isn’t a sign of continued selling; it’s a sign that sellers are becoming exhausted. Meanwhile, larger participants quietly absorb selling pressure, setting the stage for the next directional move. Think of it as compression before expansion.

Why Dipping Below Current Levels Might Be Constructive

Market analysts tracking XRP’s structure suggest the asset could briefly sweep into deeper liquidity zones, potentially revisiting wicks created during October and April’s price action. These untested zones represent areas where price moved too quickly to establish proper volume distribution.

When markets revisit these gaps, they serve a function: they rebalance liquidity, trap weak position holders, and clear technical resistance before any sustained rally. From a market structure perspective, this isn’t failure—it’s preparation. A clean sweep below current consolidation could remove the final obstacle to a higher move.

Indicators Are Quietly Building Pressure

Beneath the surface, technical indicators are beginning to shift alignment. The MACD is starting to curve upward, a reversal that typically precedes trend changes rather than confirms them. Simultaneously, the Stochastic RSI is showing compression—that familiar squeeze that precedes expansion volatility.

This combination suggests the market is storing potential energy. When the falling wedge eventually breaks, that stored momentum likely releases to the upside, not downside.

The Path Forward for XRP

If the technical narrative plays out as the structure suggests, XRP’s downside action would represent completion of a process, not the beginning of a new decline. Markets often move lower briefly to establish the foundation needed for sustained upside.

For current traders, the key is recognizing what this phase actually represents: not weakness, but preparation. Understanding this distinction separates reactive decisions from strategic positioning. Whether XRP reaches the anticipated liquidity zones or breaks higher from current levels, the underlying structure suggests the intermediate-term bias remains tilted toward the upside—assuming the falling wedge pattern holds.