XRP Triangle likely to create Rising Channel or Rising Wedge
Greetings! First things first a reminder on how chart formations nest, or develop over time and second will be a divergence primer. Lots of people have seen the symmetrical triangle developing on XRPUSD, which is great. The next step is to figure out what will form when the pattern breaks either to the upside or downside. This post is my upside senariocast, which is what I will be looking for at key moments. Final reminder: Triangles are the easiest formations to recognize but the worst to trade by themselves. They are prone to be inconsistent and underperform so they are best when paired with other structures, structures that are largely lacking right now.
Price Action Senarios
Primer on Divergences
Normal Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicator
The arrows show all kindz of bullish divergence which suggest this triangle with break up with continuation. Something that confirms this bias is the fact that the price action is above both the 12 and 26 EMA (the MACD EMAs) as it hits resistance. If the price action had the EMAS as resistance at the trendline resistance this would be very bearish. But since we don't, it is bullish as the price can ride the EMAS out of the triangle.
The MACD-Asprey version is one of the earlier forms of the MACD and it can give you earlier entries. The MACD centers more around zero so it can be evaluated compared to its histogram. In this scenario, with bullish divergence, the histogram is leading the charge to the zero level. When you start to see blank space between the histogram and MACD you have an early entry. The chart below shows the white space and how you can use hidden bullish divergence. This time it is paired up with the bollinger band and buying these can be a bit high risk for leverage traders if you in with a bad system or a great system with poor discipline. If you don't like scalping or short swing trades that wouldn't be a timeframe setup you would use. The bollinger bands stop you from getting to high on hopium and show you where you can take some profit. They are great entries for investors looking to get great prices on a project they believe in the long run. Another word for leverage traders.... I expect a grind against the bollinger band in our current instance and people should not be surprised by quick retests of the baseline or lower edge.
The normie MACD has the same histogram as the Aspray version so you see the extract same divergence. What is important about the normal MACD is that it doesn't center around zero as much, so when you see the MACD crossing up bullishly across the signal line (which is still pending) you get an extraordinarily strong move for that timeframe.
And finally, almost as an afterthought: the RSI also has the same hidden bullish divergence.
Final Thoughts
My recent and linked post on XRP show a pair of quick trades I have put on using a lot of stuff I have covered in this post. Should this chart formation break to the upside I hope to hold this trade closer to two or three weeks, not two or three days or even 12 hours. With enough confirmation I will be adding to my position when I see pullbacks and consolidations. And as I said, that is the hope, not a 100% commitment. There is also my long term post using fibchannels. I will definitely look for retracements and consolidation at these fib levels like the chart below forecasts (hopefully accurately).
Price Action Senarios
- Performs the hight of the triangle taking us to the top of the channel. A strong move that will make a lot of people happy.
- Based on above: We form a rising wedge
- Doubletop and Drop (lol) which would most likely happen on a weak move up with the top occurring at the channel midline. I find this the least likely scenario at this point.
- Goes impulsively out of the triangle and right out the channel and continues a flagpole run. Not very helpful because their is not much of a flagpole.
- Bounces between the channel baseline and midline for an extended period of time, frustrating people looking for a massive pamp but reassuring those hoping to accumulate and expecting an even bigger move.
Primer on Divergences
Normal Divergence (Trend Reversal)
Bearish: Higher highs on price action but lower highs on the indicator
Bullish: Lower lows on price action but higher lows on the indicator
Hidden (Trend Continuation)
Bearish: Lower high on the price action and higher highs on the indicator
Bullish: Higher low on the price action and a lower low on the indicator
The arrows show all kindz of bullish divergence which suggest this triangle with break up with continuation. Something that confirms this bias is the fact that the price action is above both the 12 and 26 EMA (the MACD EMAs) as it hits resistance. If the price action had the EMAS as resistance at the trendline resistance this would be very bearish. But since we don't, it is bullish as the price can ride the EMAS out of the triangle.
The MACD-Asprey version is one of the earlier forms of the MACD and it can give you earlier entries. The MACD centers more around zero so it can be evaluated compared to its histogram. In this scenario, with bullish divergence, the histogram is leading the charge to the zero level. When you start to see blank space between the histogram and MACD you have an early entry. The chart below shows the white space and how you can use hidden bullish divergence. This time it is paired up with the bollinger band and buying these can be a bit high risk for leverage traders if you in with a bad system or a great system with poor discipline. If you don't like scalping or short swing trades that wouldn't be a timeframe setup you would use. The bollinger bands stop you from getting to high on hopium and show you where you can take some profit. They are great entries for investors looking to get great prices on a project they believe in the long run. Another word for leverage traders.... I expect a grind against the bollinger band in our current instance and people should not be surprised by quick retests of the baseline or lower edge.
The normie MACD has the same histogram as the Aspray version so you see the extract same divergence. What is important about the normal MACD is that it doesn't center around zero as much, so when you see the MACD crossing up bullishly across the signal line (which is still pending) you get an extraordinarily strong move for that timeframe.
And finally, almost as an afterthought: the RSI also has the same hidden bullish divergence.
Final Thoughts
My recent and linked post on XRP show a pair of quick trades I have put on using a lot of stuff I have covered in this post. Should this chart formation break to the upside I hope to hold this trade closer to two or three weeks, not two or three days or even 12 hours. With enough confirmation I will be adding to my position when I see pullbacks and consolidations. And as I said, that is the hope, not a 100% commitment. There is also my long term post using fibchannels. I will definitely look for retracements and consolidation at these fib levels like the chart below forecasts (hopefully accurately).
Comment:
I perseverate over the charts so you don't have too. Now please pamp my bags.
Comment:
The wedge I was looking for so far hasn't developed as I would like. The price action has instead tested the top of the triangle from the main chart which is a standard thing to do. If this ascending tringle breaks down I am out
Trade closed manually:
I have taken all of my risk off for crypto based on a bunch of things I am seeing so if this breaks to the upside I'll miss the beginning. In general volume action is suppose to confirm all your chart patterns and price action and the volume action of XRPUSD right now doesn't look good enough for me. Since the pamp still have very much fine gains but there has been too much give back for me right now.
I have taken all of my risk off for crypto based on a bunch of things I am seeing so if this breaks to the upside I'll miss the beginning. In general volume action is suppose to confirm all your chart patterns and price action and the volume action of XRPUSD right now doesn't look good enough for me. Since the pamp still have very much fine gains but there has been too much give back for me right now.
And I promise every Floridian that you will all be rich... because we're gonna print some more money! Why didn't anybody ever think of this before?
~Nathan Explosion
~Nathan Explosion
