XRP's Plunge: Worst Yet to Come as H&S Pattern and Bearish Kumo Loom

XRP's price has already declined by -42% from its peak of $3.40 on January 16, but renowned technical trader Josh Olszewicz (@CarpeNoctom) warns that the worst may be yet to come. In his daily chart analysis, Olszewicz highlights two significant technical developments that could push XRP prices lower in the near future: the Head and Shoulders (H&S) pattern and a bearish kumo breakout.

The H&S pattern is a well-known reversal formation in technical analysis, typically emerging after a substantial upward rally. In the case of XRP, Olszewicz's chart suggests that the central head formed around $3.40 in mid-January, while the shoulders appear to be topping out between $2.83-$2.90. Technical analysts pay close attention to the neckline, which generally runs along a key support level beneath the peaks. When the price decisively breaks below this neckline, it is viewed as confirmation that selling pressure has overwhelmed buying interest, often leading to further downside.

Olszewicz's comment also highlights the phrase "bearish kumo breakout," referencing the Ichimoku Cloud system, another prominent tool for charting and forecasting price momentum. A bearish kumo breakout arises when the price action clearly drops below the Ichimoku Cloud and the future cloud itself shifts in a way that indicates weaker bullish momentum. The core idea is that once an asset's price slips under the cloud, a further decline becomes more likely, since the cloud that previously acted as support is no longer providing a cushion.

From the chart Olszewicz provided, the current price action around $2.18 sits just above a conspicuous support area in the $2.00 region, which he interprets as the neckline for the Head and Shoulders pattern. If that zone gives way, bears could potentially dominate the market, with Fibonacci levels marked on the chart pointing to a possible first stop near $1.94, followed by an even steeper target. The chart appears to highlight a 161.8% Fibonacci extension level at around $1.24, which could come into play if selling accelerates. The presence of these Fibonacci levels does not guarantee a breakdown to those lows, but notably, a typical breakdown from the H&S pattern could spell even more