The XRP price traded at $1.31 on March 31, sitting directly above the neckline of a head-and-shoulders pattern that carries an 18% measured breakdown target if it fails.
The 4-hour chart shows the right shoulder has already formed at $1.36, with the head at $1.60 and the neckline running through $1.30. As March closes, two conflicting signals are developing beneath the surface that will likely determine whether XRP breaks down or bounces into April.
Aggressive Short Positioning Could Fuel a Squeeze Above $1.30
XRP’s open interest climbed from $741.8 million on March 28 to $752.1 million by March 31, according to Santiment data. The XRP funding rate fell deeper into negative territory from -0.0016 to -0.007, a 4.3x negative shift. That combination shows traders are opening new short positions at the neckline, betting on the head-and-shoulders breakdown to complete.
However, this positioning creates the conditions for a short squeeze if XRP holds. On March 26, a similar setup played out. Open interest had risen to approximately $784 million with funding at -0.01, and instead of breaking down, XRP price bounced from $1.35 to $1.37 as shorts were forced to cover. The current structure mirrors that episode closely.
A funding rate reversal toward neutral (with OI dropping) would signal short liquidations are underway and could trigger a move toward the right shoulder at $1.36. If funding remains deeply negative and price breaks below $1.29, the shorts would be validated. But that’s not the only trigger.
The 4-hour price chart shows a standard bullish divergence forming between March 27 and March 31. While price is making a lower low approaching the $1.30 neckline, the Relative Strength Index (RSI), a momentum oscillator, is close to confirming a higher low setup above 36 level. That divergence suggests buyer momentum is improving even as price drifts lower.
Confirmation requires the next 4-hour candle to close above $1.30. If it does, the divergence activates, and the derivatives-driven squeeze scenario gains traction, targeting a bounce toward $1.36.
Short-Term Holder Supply Drops to Two-Week Low
Besides momentum and derivatives fuel, the current XRP price structure can also benefit from the reduction of speculative money flowing into the token.
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Glassnode’s HODL waves data for XRP’s 1-day to 1-week holding cohort, a proxy for speculative money that typically drives short-term selling pressure, shows a steady decline through March. On March 18, this cohort held 1.034% of circulating supply when XRP traded at $1.46. By March 28, their share had fallen to approximately 0.86%. As of March 31, it sits near 0.55%, a two-week low.
That decline matters at the neckline because this cohort represents the fastest hands in the market. These are the holders most likely to panic-sell into a breakdown or to chase momentum on a bounce. Their reduced presence means there is less immediate supply available to drive XRP below $1.30 on a closing basis. Combined with the aggressive short positioning visible in the derivatives market, the on-chain picture tilts toward a bounce rather than a breakdown.
XRP Price Sets Up For a Final Test at $1.30
The key XRP price levels now come into focus.
The key technical levels clearly highlight the $1.29-$1.30 zone as the final test. If broken on the 4-hour timeframe, the next support levels sit at $1.24 (0.382 Fib) and $1.17 (0.618 Fib) as deeper targets. The breakdown theory weakens if $1.29-$1.30 holds. That way, the XRP price can attempt a move toward the right shoulder or $1.36.
A 4-hour close above $1.30 activates the bullish divergence and targets $1.36. A close below $1.29 confirms the neckline breakdown and exposes $1.24, $1.17, and even a deeper target of $1.12.
