Trade Recommendation: Ripple
We have this gut feeling that Ripple (XRP/USD) will do something spectacular in the next few days. We have this view after the market breached support of $0.30 on December 14 only to recover it on December 17. This price action was a bear trap which ignited a strong rally to $0.4062 on December 19. While the market continues to respect the resistance, we believe that it is only a matter of time before bulls breach that level.
Technical analysis shows that XRP/BTC is creating an inverse head and shoulders pattern on the 4-hour chart. The emergence of this pattern tells us that Ripple is done with consolidation. More importantly, it shows that market participants are rejecting lower prices. A pattern breakout should spark a strong rally.
In addition, we spotted a golden cross on the 4H chart as the 50 MA crossed above the 100 MA on December 20. On top of that, we have another golden cross in the making as the 50 MA is poised to go above the 200 MA. These indicator movements tell us that the market is about to turn bullish.
The strategy is to buy the breakout of $0.40 as long as Ripple prints volume of at least 17 million on the 4H chart. Bears will try to keep market control, so expect heavy selling at the resistance. Ripple needs buyers to overcome the selling pressure.
Once XRP/USD takes out $0.40, the target is $0.50.
The process may take less than a month.
Weekly Chart of Ripple/US Dollar on Bitfinex
As of this writing, the Ripple/US Dollar pair is trading at $0.37568 on Bitfinex.
Summary of Strategy
Buy: Breakout of $0.40 after volume of at least 17 million on the 4H chart.
Stop: $0.39 after the breakout.
Disclaimer: The writer 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.