Technical Analysis and Market Entry: XRP Correction Making Way for Bulls
- Ripple’s XRP price encountered a deep market correction, pulling back some 25% between 16-18th May.
- XRP/USD bulls have staged a rebound using a prior area of supply as a new comfort level.
XRP/USD: Recent Price Behavior
Ripple’s XRP price is bouncing back aggressively after facing some difficulty over the prior three sessions. XRP/USD had initially hit a high up within the $0.4800 territory, which was the highest seen since 20th November 2018, before running into some chunky sellers. The correction was observed across the market, which is somewhat understandable, given XRP jumped over 40% in just two sessions.
The wave of buying pressure seen between 14-15th May came after the bulls managed to break above a vital area of resistance. A descending trend line was containing and limiting upside pressure from the market bulls, which had been in play since 23rd September. Price action at the time remained below the line of resistance and was narrowing significantly. The trading conditions were screaming for a breakout of the tight nature.
As previously mentioned, the XRP/USD price did pullback between 16-18th May, dropping around 25% within the period. It has been forced to retreat down to a near-term area of demand, tracking from $0.4000 down to $0.3500. The noted zone is an area of which has previously acted as strong resistance, having contained the price through 2019. XRP had not convincingly traded above this zone since November 2018.
It is somewhat of an encouraging sign for further upside to see the pullback and stabilizing effect. Should the price have broken through the support, the next likely area of comfort would have been the breached trend line. XRP could have seen a retest down at $0.3100, but now is using further supply and support. The bulls have so far capitalized on this, at the time of writing, holding gains of over 8%. It signals that another wave of buying pressure to the upside may be followed shortly.
Given the noted bullish momentum and newly found area of support, a buy from current levels is attractive. As long as the current daily candlestick closes in the green above the zone, $0.4000-$0.3500, further upside momentum could very well follow. In terms of upside targets, eyes will be again on the above region of supply, where the price most recently faltered. The noted area runs from $0.4400 up to $0.4800, which is the last significant barrier ahead of a return to the psychological $0.5000 territory.
Should the price pressure continues north, the next area of interest for the bulls will be to tackle the $0.5700-$0.6000 range. XRP/USD last traded up at these heights on 5th November, before falling at the total mercy of the bears, losing some 50%. Stops are to be placed just below the current supporting new demand, leaving some breathing room at $0.3450. If this fails to hold, then longs will be off as the price will likely then head for the earlier noted trend line retest.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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