[DigitalToday reporter Jinju Hong (홍진주)] XRP is keeping open the possibility of further declines below $1 on the charts, but a surge in tokens moving off exchanges is countering a short-term plunge scenario. Technical analysis shows the bearish pattern remains in place. On-chain data, however, show both buying accumulation and lower leverage, leaving market readings mixed.

On May 25, BeInCrypto, a blockchain outlet, reported that XRP is currently forming a bearish head-and-shoulders pattern on a 12-hour chart. The left shoulder was completed in early March, the head in mid-March and the right shoulder in mid-May. The key neckline is around $1.18.

XRP recently fell to $1.3 before rebounding, but it has yet to reclaim levels above the right shoulder and head area. The market sees a high chance the existing bearish trend will hold if it fails to break above that zone. The expected decline based on the head-and-shoulders pattern was estimated at about 18 percent.

On-chain data, however, are sending a signal in a different direction from the chart. Glassnode's exchange net position change indicator showed XRP exchange outflows expanded from minus 7.14 million XRP on May 15 to minus 29.37 million XRP on May 24. That means exchange outflows rose more than 300 percent in about 10 days.

In general, when coins move off exchanges, the amount of immediately sellable supply falls, which is seen as a factor that reduces short-term downside pressure. This move also appears closer to a steady increase in outflows than a one-off large transfer. Some analysis says it reflects deliberate accumulation by investors.

Signs of overheating in derivatives markets also eased somewhat. Santiment, an on-chain analytics firm, said XRP open interest fell from about $1 billion on May 15 to $914.19 million recently. The long-position funding rate also dropped from 0.008 percent to around 0.003 percent. With long funding down about 62 percent, the risk of cascading liquidations was also seen as lower than before.

The market sees that if leverage falls, forced liquidations on declines can drop, reducing the chance of a deeper selloff. That has been cited as a factor that is somewhat positive for recent XRP price defence.

At current XRP price levels, key support lines are being cited in succession. XRP traded around $1.35 as of May 25, and $1.34 and $1.28 are being discussed as short-term inflection points. After that, $1.21 and the key neckline at $1.18 were identified as key levels that will determine the medium- to long-term direction.

Some analysis also says that if a 12-hour candle closes below $1.18, it could open the way for additional declines to $1.01 and $0.96. BeInCrypto presented $1.01, the 1.618 Fibonacci extension level, as a key bearish target price.

An upside scenario also remains. If XRP recovers the $1.55 area, the current bearish bias could weaken, and it could open the possibility of a renewed break above $1.6. If a 12-hour candle closes above $1.60, the current head-and-shoulders pattern is likely to be invalidated.

Ultimately, the XRP market appears to have entered a zone where bearish chart signals and on-chain buying signals collide head-on. The expansion in exchange outflows and lower leverage are seen as factors that partly reduce the risk of a short-term plunge. Market direction could again diverge sharply depending on whether it breaks below the key support at $1.18.