Technical Analysis and Market Entry: XRP/USD at Risk of an Imminent Breach of $0.20

Ripple
  • XRP/USD is firmly within the control of the market bears, running at its third straight week in the red. 
  • Price action broke out and retested a bearish pennant structure, leaving the door wide open to further selling. 

XRP/USD: Recent Price Behavior

XRP price remains vulnerable to another strong wave of downside momentum, as the sellers regain control. Price action is yet to escape this stubborn bearish trend, which came into play late June. XRP/USD has dropped as much as 55% from the psychological $0.5000 mark, down to $0.2250. It printed its lowest level since December 2017, proving the extent of this current market trend.

Following the noted low print on 15 August, a surge of buying momentum came back into play. XRP/USD produced somewhat of a reversal Doji candlestick via the daily view, which was followed up by a decent short-term push north. It rallied some 30%, running into a barrier heading into the psychological $0.3000 area. In proximity, the price retested a bearish pennant structure, which the bears had breached.

As a result, XRP/USD price action formed an evening star via the daily chart view on 19 August. The technical formation played out to the textbook, with a wave of selling that followed in the session on Tuesday. There were several confluences for the bearish bias, including the $0.3000 rejection, a retest of the breached pennant and strong daily resistance at $0.2850.

XRP/USD daily chart.

Technical Structures Signal More Selling

Between 11 July-6 August, XRP/USD began to consolidate and form a bearish pennant structure. It came after the harsh selling observed from late June until mid-July. The breakout and retest were seen between 6-7 August, which opened to the door to further downside pressure.

Another smaller pennant formed from 9-13 August before a huge breach occurred to the downside, dropping to the recently noted low at $0.2250. The above-detailed recovery was short-lived, as it appears the bears held firm on selling any rallies. XRP/USD is gradually losing ground in the major demand area, i.e., $0.3000 down to $0.2500. Should the price see a daily breakout and closure below, this could prove to be very punishing indeed.

The weekly candlestick last week produced a long wick to the downside, leaving room technically for this to be filled. If this plays out by the textbook, a retest of that low down at $0.2250 could very well be seen.

XRP/USD weekly chart.

Trade Recommendation 

Given the recent technical price developments, a bearish bias remains favorable. In terms of targets to the downside, $0.2500 is the first, opening the door to a retest of $0.2250. Stops would be placed at $0.3100. Should the latter fail to hold, then eyes will be on the psychological $0.2000.

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.

Featured image courtesy of Shutterstock. 

Author:
Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.