Technical Analysis and Market Entry: XRP/USD – Bulls Readying for the Return of $0.5000 and Beyond

  • Ripple’s XRP price is trading within consolidation mode, after failing to sustain the upside momentum seen last week.
  • XRP/USD price action has formed a bullish pennant pattern structure, subject to an imminent breakout.

XRP/USD: Recent Price Behavior

Ripple’s XRP price is back within consolidation mode after making an aggressive advance higher just last week. XRP/USD has run up to its highest level seen since 20th November 2018, at $0.4800, gaining around 50% between 14-16th May. The bulls very quickly lost upside momentum, failing to break through the last major barrier ahead of the psychological $0.5000 mark.

Lower Highs Trend Breakout

XRP/USD managed to break out from a trend of lower highs, which had been observed since September 2018. The price had been producing these lower highs to then have the rallies quickly sold, always sending XRP to retreat sub-$0.3000. It demonstrated that the market was still yet to escape the strong and stubborn bearish trend.

In September the high area ranged from $0.6000-$0.7600, given the large upper wicks. The lower highs were then as followed: $0.5600 in November 2018, $0.4500 in December 2018, and lastly $0.3700 in April 2019. As noted above, the bulls consistently were unable to sustain the upside momentum of each rally.

XRP/USD daily chart.

Bullish Pennant

The recent price cooling observed over the past few sessions, which started to take effect on 16th May, has seen XRP/USD drop some 25%. During this period, price action has been narrowing extensively forming a pennant pattern or triangular structure. The behavior and formation are at present screaming imminent breakout.

Key Near-Term Technical Levels

To the upside, immediate resistance is seen at an upper acting trend line of the detailed pennant pattern structure. It can be observed tracking around $0.4000, a break above here would then open the door for another retest of the supply zone, $0.4400-$0.4800. In terms of support, this is noted at $0.3750, where the lower trend line is running. Separately, an additional confluence of support runs from $0.3900-0.3570, a strong area of demand.

Trade Recommendation

Taking a buy from the current price area looks attractive, given the recent price behavior. The above-mentioned confluences of support include, which include the trend line of pennant and demand zone, back long positions. An initial target to the upside would be for another reclaim of $0.4800; further north, eyes will be on a push back into the $0.5000 territory. Stops should be considered just below the noted demand zone at $0.3500, and longs would be off the cards if this fails to provide the necessary support.

Should the bears force the break below, then there may be another opportunity for longs upon a trend line retest. XRP/USD broke above the long-running resistance trend line on 13th May, which had contained the price since September 2018. It can be seen tracking back down at the psychological big buying area of $0.3000.

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.

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.