$XRP Could Bounce Short-Term, Long-Term = VERY Bearish

XRP is a coin that we have not covered in quite some time. Due to its bullish price action (relative to the rest of the crypto markets), we’re going to take some time today to see what in the world is going on with Ripple.

Without further ado, let’s go ahead and get to it.

XRP Price Analysis

To start off with, we’re just going to look at the daily resolution for XRP (on the USD/USDT pairing) and see what has been going on with the price action over time.



Here it is with the Zig-Zag overlay on it.

Below, we can see that there was a clear double-bottom that formulated itself on the daily chart a couple of months ago (in late August/Early September)



Pay special attention to what is written on this chart, because its all important and relevant to how we’re going to be looking at the price action of XRP going forward.



If we pan even further out, we can see that double-bottom on the daily resolution also coincided with a massive falling wedge breakout.

So the boom in XRP’s price should not have been totally unexpected for those that have been tracking this daily chart.



So What Happens Now?

Let’s simplify the chart first by taking away all of the writing and lines and look at what the situation is currently:



In the chart above, we can see that the price of XRP is currently sitting at the support point that was established by the neckline of the double-bottom that we identified in the second chart of this price analysis.

So, this is expected to be a fairly sturdy support point.

However, the best course of action would be to look at some of our other momentum-based indicators to get a better understanding of the price action to see if there is enough sell pressure to force the price below this support point, or if the bears are too exhausted to move below the support point, making an impending bounce more likely.

In order to do so, we’ll first take a look at the Zerononcense Reversion Ribbon V2.

Zerononcense Reversion Ribbon V2



In a nutshell, the reversion ribbon appears to indicate that there is a slight chance of a reversal at some point in time. This, however, is not guaranteed and the time frame for such a reversal is uncertain.

Relative Strength Index(14)



The RSI(14) on the daily resolution isn’t giving us any hints/clues as to what could happen next, but we may be able to find out more information on some lower time frames.

Let’s check out the H4:



Again, this is the H4 resolution, so you have to take it with a grain of salt. Lower resolutions do not produce signals that are as strong as those garnered from higher resolutions (i.e., daily and above), but they can still be reliable for short-term trading action.

Balance of Power RSI



Similar to the RSI(14), we weren’t seeing anything fruitful on the daily resolution, so we scootched the resolution down to the H12 to see if we could detect any underlying increase in buy pressure for XRP.

If you look at the chart above, you can see that we identified a little bit of increase in the buy pressure, but nothing substantive.

There was a large increase on the H4 resolution (not displayed), but that is currently on the move down as well. There’s no telling whether that will pick up or continue to draw down over the next few periods.

Exponential Moving Averages

At this point in time, we’ve more or less established the fact that there is a chance that the price action reverses and all of the indicators that we have looked at thus far have corroborated this assumption (on different timeframes as well).

So, for now, we’re going to go ahead and look at the exponential moving averages on the daily resolution to get a better idea of the potential resistance points that the price will run into if there does happen to be a reversal.

However, first we’ll look at the behavior of the exponential moving average indicators to get a better idea of what may happen in the future for XRP.

See the chart below:



The first, and perhaps most important observation regarding XRP and its exponential averages (on the H12 resolution), is the death cross that has recently occurred.

This is almost always a foreboding sign that indicates significant negative price action in the future (although, not always).

Typically, this is signaled by the 200-period moving average crossing above the 50-period moving average.

In this case, we are using the exponential moving average because of the vast differences between the highs and lows for the price of XRP.



As we look deeper into the exponential moving averages for XRP, there is yet another major sign that would conventionally render a bearish outcome:



Again, it is worth reiterating the fact that the subsequent price drop usually does not occur immediately (when found on the daily resolution), but rather over a period of weeks/months.

Also, this crossover was found specifically during this period, so this is a situation where the cross could fail to hold if there is a short-term boost in the price (thus having a greater impact on the shorter moving average [the 50]).

Resistance Points

The resistance points on the daily resolution are so far above where the current price is stationed, that it isn’t worth delving into this too deeply until there is some definitive, positive price action for XRP (Ripple).

Support Points

Support points, however, are definitely worth discussing, because they may become imminently relevant.

Let’s check out some (plotted via price action) below:



The drops in these support points represent a depreciation (in USD value) of 9% and 22%, respectively.

If we pan back to the RSI(14) on the daily resolution, we can see the momentum can definitely drop lower than where it is currently (still not even in the oversold point yet).



It’s worth noting that the oversold point in a bear market is typically delineated by traders at -10 of where it usually is, so an RSI of <20 would be a better point to use as an oversold marker right now.

Conclusion

Long-term, XRP looks undeniably bearish.

Short-term, it looks like there could be an impending reversal in the price. However, this is far from guaranteed at this point, and we’d need to see a little bit more development in the price before assuming such a thing as truth going forward.

There is no specific trading idea on XRP at the moment. This is a ‘wait and see’ for the time being until something ‘more clear’ begins to form in the immediate and long-term price action.

For the time being though, this is one that we are definitely bearish on long-term.

Disclaimer: Nothing written about should be construed, perceived or accepted as financial advice. This is not written in advocacy of any personal finance strategies. Your decisions are your own and the author assumes zero liability for the outcome of those decisions. The author has zero conflicts of interest currently to disclose and is not currently an owner of Bitcoin or any other rival currencies at this point in time in accordance with SEC regulations and guidelines.