XRP's Structural Setup: Why a Potential Dip Precedes Strength—The Falling Wedge Story

When markets correct after significant rallies, they rarely move in straight lines. Instead, they tend to revisit unresolved support and resistance levels, rebalance order flow, and test the resolve of market participants before establishing a sustainable advance. XRP’s current price structure mirrors this textbook scenario precisely, where near-term weakness may actually serve a constructive purpose within a broader bullish framework.

Recent technical observation suggests that $XRP could test lower price regions to capture unfilled liquidity zones before positioning for a more convincing rally. This dynamic often creates confusion among traders who fixate on immediate directional moves rather than recognizing the larger rebalancing process at work.

Decompressing Since the 2021 Peak: A Structural Timeline

XRP’s journey from its 2021 all-time high has been characterized by a prolonged consolidation phase rather than a destructive reversal. The early stage of this multi-year structure took shape as a descending triangle—a pattern that methodically squeezed price action until a sharp liquidation event in October forced the market to reset its momentum.

This October washout served a specific function: it flushed overleveraged positions and cleared excessive positioning from the system. What followed was a retest of former trading ranges, which confirmed that the underlying structure remained intact despite the violence of the sell-off.

The Falling Wedge: Signals of Compression and Preparation

As $XRP continued to trade lower in measured fashion, a falling wedge formation emerged on the chart. This technical pattern, when accompanied by diminishing volume and normalized momentum readings, typically favors an upside resolution rather than further decline. In practical terms, the falling wedge reflects sellers losing conviction rather than demonstrating accelerating selling pressure. Price is being compressed, not destroyed.

The distinction matters for positioning. Within a consolidating falling wedge, short-term dips are part of the expected structure, not evidence against the underlying thesis.

Understanding the Liquidity Fill Below $1.80

Technical analysts focusing on XRP’s price history point to unfilled wicks from October and April—areas where price moved too rapidly to build meaningful volume. These gaps represent resting liquidity that markets often return to for rebalancing purposes before executing higher moves.

From a market microstructure perspective, these liquidity sweeps typically accomplish two goals: they trap weaker short positions and flush out marginal holders, creating cleaner conditions for the subsequent advance. The sweep is a feature, not a bug, in healthy market structure.

Momentum Building Beneath the Surface

Despite near-term downside potential, several indicators point toward improving internal momentum. The MACD is beginning to exhibit upward curvature—a signal that often precedes trend shifts rather than confirming existing weakness. Simultaneously, the Stochastic RSI is displaying notable compression, typically indicating that volatility is being stored rather than released.

When this compression occurs within the context of a falling wedge pattern, the eventual volatility expansion frequently favors upside breakouts, particularly after liquidity objectives have been achieved.

From Sweep to Sustained Move

If $XRP completes its liquidity sweep while preserving the broader falling wedge structure, the technical setup becomes increasingly favorable for a sustained advance. In this scenario, the downside action represents completion of the preparation phase, not confirmation of weakness.

Current price sits at $2.07 with a 24-hour decline of 1.00%, a position that remains consistent with the larger consolidation framework. Understanding this phase requires recognizing the process rather than obsessing over exact price targets. Markets frequently move lower on a temporary basis to establish the foundation for higher moves. For $XRP, that setup phase appears to be in active development.