There has been a dominant uptrend in Ripple’s XRP. Will this continue, or will the bears get a chance?
So, we can deduce from the above that the bulls have been on high steam for about 2 weeks, keeping Ripple in a clear uptrend since the price broke the neckline (white gradient line) of the inverse head and shoulders pattern. However, upon reaching the resistance zone (blue line) somewhere around 0.54491, the momentum died. Or did it? Here’s what might have happened:
- Buyers observed the market and predicted that buyers would close their trades when getting to the resistance level and reacted by closing their trades as the price approached that level.
- Fewer buyers mean more sellers will gain momentum. Hence, sellers also observed that buyers would pull out at that level and start opening sell orders.
- The combined action of buyers closing their trades and sellers opening theirs is the cause of the sharp bounce from the resistance level and causing a pullback.
- This may be a reaction to the news that the U.S. SEC (Securities and Exchange Commission) has filed a suit against Binance and Coinbase, causing cryptocurrencies to fall further.
It is popularly understood that prices do not usually stretch. At some point in a trend, the market has to retrace, even if it will continue in the same direction later on. Most traders use the analogy of a rubber band that has to snap back after reaching its elastic limit.
From the above, we can see the resistance level and the neckline of the head and shoulders pattern (red arrow). Trading the pullback can be risky and uncertain because a pullback doesn’t automatically mean a reversal. Some sellers might scalp, and some others might hold for longer, possibly holding on for a proper trend reversal instead of just a pullback. Hence, determining the life span of the pullback will be difficult.
Most likely, the pullback might fall to around 0.47946 – 0.47252 and hit the neckline, which now acts as support, as indicated by the red downward arrow. Bulls will be watching closely and might start to overpower the bears again upon reaching that level.
There’s a small chance that the bulls may not gather enough momentum at that level because of the presence of the resistance level; the bears could perceive it and act accordingly, which might cause a breakout at the neckline support, which may signal a minor trend reversal. Or worse still, the price might start to range between the resistance and support levels and have no strong directional bias. Let’s wait and see, shall we?
Featured image: Shutterstock
Disclaimer: The information on AlteBlock reflects the authors’ personal opinions. It does not represent AlteBlock’s opinions on whether to buy, sell, or hold specific investments. It is suggested that you conduct your own research before making any investing decisions. You use the information at your own risk. See Disclaimer for additional details.
Dominic Jubemi is primarily into legal practice. However, he has taken interest in building and grooming fundamental skills in FX and Crypto trading, audio engineering and in the nearest future, fiction writing.
