Ripple Update: Bulls Poised to End Bear Market

Ripple (XRP/USD) came to life on September 18, 2018 when it breached resistance of $0.30. This sparked an unexpected yet strong rally to $0.79132 on September 21. In a matter of three days, Ripple skyrocketed by over 160%.

The price action can make it seem that bulls have finally taken over the market. Unfortunately, the pump was nothing but a dead cat bounce. Once the rally faded, Ripple lost all bullish momentum. Those who bought the bottom between $0.25 – $0.30 leveraged the pump to distribute positions and instigate the markdown.

Ripple may look incredibly bearish right now but it actually has an opportunity to end its year-long downtrend. In this article, we reveal how bulls are in a position to end the Ripple bear market.

Possible Double Bottom Formation

It’s quite difficult to be bullish on Ripple especially if you’re a day trader. A quick look at the 4-hour chart shows that the market is forming a bear flag. Breach of $0.30 support is a continuation of the bearish trend.

4H chart of XRP/USD

If Ripple breaks out of this pattern, the target is support of $0.25. This is where bulls can make their stand and end the bear market.

At that point, conditions will be right for the defense of $0.25. The 4H and the daily RSI will likely be oversold. On top of that, the daily RSI has the potential to create a double bottom pattern. The likelihood of bearish exhaustion and the increased demand at $0.25 will make it easy for bulls to establish a double bottom pattern on the daily chart.

Possible bottom for Ripple

A double bottom structure makes sense at this level because $0.25 is the market’s parabolic support. If you look at the weekly chart, you will see that this level used to be a strong resistance area. When bulls blasted through it in December 2017, Ripple skyrockted to $3.30.

Weekly chart of Ripple

If bulls can hold on to this level, they can effectively end the bear market.

Shift from Markdown to Accumulation

The end of the bear market does not imply an immediate trend reversal. Although it is within the realm of possibilities for Ripple to pump itself into a bull run, we expect the market’s trend to shift from down to sideways. The formation of the double bottom structure should end the bleeding and usher in a new market cycle.

XRP range accumulation

We expect Ripple to range trade between $0.25 – $0.57 for the next few months. This will be the time when market makers and smart money investors enter positions in preparation for the next market cycle. As long as $0.25 holds, it would be wise for retail investors to accumulate positions at these levels as well.

No one can tell when Ripple will shift from accumulation to markup. When it does, however, those who bought positions near $0.25 can potentially grow their investments by over 1,200% if the market revisits its all-time high of $3.30 on the next bull run.

Prepare for Invalidation

Buying at the projected accumulation range sounds promising. Nevertheless, there’s always a possibility that our assumptions are incorrect. In the off chance that the bottom is not yet in, we can expect the market to perform these steps:

  • Weak bounce and inability to take out range midpoint of $0.41.
  • Breach of $0.25.
  • Retest of $0.25 as resistance  

Possible bear market continuation

Should this happen, you can cut your losses at the retest of $0.25 as resistance to minimize your risk.

Bottom Line

Ripple may look bearish right now but in reality, bulls have a decent shot to end the bear market. If they’re successful, we can expect Ripple to range trade for the next few months in preparation for the next bull run. This is where retail traders can accumulate with the smart money investors. However, it is also wise to plan for invalidation and protect your capital.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, InvestorAcademy.org where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.