More than a week ago, XRP reached our short-term price target of 0.30$ in a brief and sharp selloff. However, since then, the price has erased its losses and gained over 20% from the low. Interestingly, this retracement coincides with the price returning to the 50-day SMA, which is usually associated with corrections of the primary trend. Therefore, we will pay close attention to this level and its ability to halt further price rise; a breakout above it would hint at a very strong correction of the downtrend (and potentially to a continuation of the rally/trend reversal). In such a case, we will pay close attention to volume levels and whether they will be sufficient to propel the price higher.
Since the lows, the volume-price trend has been bullish; therefore, we will look for a decline in volume to suggest the exhaustion of the rally. Furthermore, we will closely observe the stock market to which cryptocurrencies are highly correlated. Based on the premise that the U.S. market is set to dive deeper into a recession in 2023, there is a very high likelihood of the stock market returning to lows, dragging XRP with it. Therefore, we think it is too early to announce the start of a bull market.
Despite that, we can not ignore the lack of follow-through with the price action in the selloff to 0.30$. Therefore, if the price breaks and holds above the 50-day SMA (without signs of a significant decline in volume), we will be forced to abandon our medium-term price target of 0.28$ for XRP. At that point, it will be better to wait on the sidelines and wait for the picture to clear out before setting new price targets.
Illustration 1.01
Illustration 1.01 shows the daily chart of XRPUSD. Yellow arrows indicate price retracements to moving averages.
Illustration 1.02
Illustration 1.02 portrays the weekly chart of XRPUSD. Yellow arrows indicate price retracements to moving averages. Constellation of 20-week and 50-week SMAs stays bearish.
Technical analysis
Daily time frame = Bullish
Weekly time frame = Neutral
Illustration 1.03
The weekly chart of XRP shows the declining volume as a sign of decreasing selling pressure and drying up liquidity, which may lead to more volatile movements.
Illustration 1.04
Illustration 1.04 displays the daily chart of XRPUSD. Green and red arrows hint at the price-volume trend over the past few days. Growing volume with the price is bullish for the short term. We will look for the decline in volume for signs of exhaustion in the price rally.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Since the lows, the volume-price trend has been bullish; therefore, we will look for a decline in volume to suggest the exhaustion of the rally. Furthermore, we will closely observe the stock market to which cryptocurrencies are highly correlated. Based on the premise that the U.S. market is set to dive deeper into a recession in 2023, there is a very high likelihood of the stock market returning to lows, dragging XRP with it. Therefore, we think it is too early to announce the start of a bull market.
Despite that, we can not ignore the lack of follow-through with the price action in the selloff to 0.30$. Therefore, if the price breaks and holds above the 50-day SMA (without signs of a significant decline in volume), we will be forced to abandon our medium-term price target of 0.28$ for XRP. At that point, it will be better to wait on the sidelines and wait for the picture to clear out before setting new price targets.
Illustration 1.01
Illustration 1.02
Technical analysis
Daily time frame = Bullish
Weekly time frame = Neutral
Illustration 1.03
Illustration 1.04
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Trade active:
The price broke above $3.37, however, volume remains relatively low. We will pay close attention to price action and see whether XRP will be able to hold above this level.
Comment:
*correction to the comment due to typo* the price broke above $0.37. Now it broke back below it.
Trade active:
Volume flashes warning signs.
Trade closed manually:
Due to the risk of a further upside, we abandon our medium-term price target of $0.28. Despite that, we want to note that the volume has declined significantly, indicating fewer people willing to buy XRP above $0.38.
Trade active:
Warning signs are flashing. The rally is due to reverse.
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