Technical Analysis and Market Entry: XRP/USD Set for Another Potential Nose Dive
- The XRP price action is firmly within the control of the market bears, with further selling pressure still eyed.
- XRP/USD has formed a potentially deadly double top formation and is moving within a bearish pennant.
XRP/USD: Recent Price Behaviour
Price action for XRP/USD remains largely tilted to the downside, trading just off the lowest levels in some thirteen months. Pressures to the south are increasingly raising the risk of a 0.2000 breach. The price has dropped a whopping 30% over the last seven weeks, running at its fifth consecutive day in the red. Trading conditions remain extremely narrow, following the large tumble from the start of November.
XRP/USD had smashed out from a bearish flag structure, falling from heights of $0.3100, down to recent lows of $0.2000. The price is now moving within consolidation mode, ahead of the further committed moves potentially south. In terms of this current bearish trend, it had picked up pace after the bulls ran out of momentum in June. XRP/USD initially made such a promising start to 2019, having gained as much as 85%. The price, however, ran into substantial difficulties at the psychological mark of $0.5000.
Price action has very recently formed a double top pattern, after hitting $0.2315 on two occasions and being dealt with rejection. The respective tops were hit on; 29 November and 8 December. It is essential to note the neckline of the textbook formation, sitting at $0.2130. At the time of writing, XRP/USD can be seen heading for a retest of this area. Technically speaking, a double top is vulnerable to an explosive neckline breach.
In addition to the above-detailed double top formation, price action can be seen narrowing within a bearish pennant structure. XRP/USD has been trading in this since 24 November; conditions are very much tight and subject to a breakout. The range at present is observed at $0.2275, the upper acting trend line, down to $0.2140, the lower trend line of the pennant. Should the bears be able to capitalize on this, the psychological 0.2000 will likely be given up.
Given the above-described technical formations, short positions remain opportunistic at present. An entry around the current market price is of interest, with targets eyed at; $0.2000, $0.1800, $0.1600 and then $0.1480. Stops to be placed just above the pennant structure at $0.2370.
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.