Technically Explained: XRP/USD
Weakening resistance levels, are the bulls loosing their strength?
Summary
- XRP USD follows a repetitive descending trend line pattern with support levels at USD 0.28; another short-term wave is predicted from current USD 0.30.
- The 6-month expected target is USD 0.80 from the current descending triangle breakout.
- Long term resistance level is set at USD 1.23 based on the squeezed Bollinger bands spread difference that will ultimately breakout.
Short Term Outlook:
Time Frame: Nov 2018 — Present
Analysis: 2 Months
Pattern Behavior:
The trend formed a hanging man candle as on 16 March 19 signifying a selloff in the near term. The hanging man candle signifies a session low and opening at the same price. In the above trend the hanging man candle was followed by a doji and a repetitive hanging man signaling a sharp selloff.
The trend is expected to touch the recent support levels of USD 0.28
The prediction is based on the Repetitive trend pattern that the coin follows. The chart marks the repetitive patterns that formed a near term resistance level followed by a bear reversal in parallel yellow channels for Nov,2018 and Jan,2019. A similar pattern is formed as the resistance level of USD 0.32 was touched on 20 Feb,19. The trend is expected to touch the current support levels of USD 0.27 with hanging man formation as well as strong evidence of repetitive trends from Nov 2018 and Jan 2019 patterns.
Short Sell (14 Days):
Entry Point: USD 0.306
Exit Point: USD 0.278
Stop Loss: USD 0.31
Indicator
Parabolic SAR and Long-Term Moving Average (125 Days):
Parabolic Stop and Reversal indicates the direction of a trend and suggests entry and exit point
with respect to the distance between the candle and the parabolic line (blue line).
In the above chart the Parabolic SAR is used with a long term 125 moving average line in order to rule out the possibility of false trade signals.
The moving average line is clearly above the SAR which signifies a bear rally to another support level lower than the earlier one. A bear circuit in the near future is expected.
Also the SAR Blue line have not touched the candle shadow, which signifies the possibility of a further downtrend
For the short term one can take a short sell position with exit point at USD 0.27
Medium Term Outlook
Time Frame: Sept 2018 — Present
Analysis: 5–6 Months
Pattern Behavior:
The coin formed a descending triangle pattern with 6-month high formed in sept,2018 at USD 0.803 and support levels at 0.27 in Aug,2018.
The sluggish pattern that was formed in the period between Sept,2018-March,2019 was repeated in the period between April,2018- Aug,2018 where the levels of USD 0.92 were hammered to the levels of USD 0.277 in the month of Aug,2018. The trend rallied to a downtick due to numerous hanging man candle formation that signified selling pressure after a significant increase in the buy volume.
In the above chart the period between Sept,2018- March 2019, a similar trend behavior is noticed. After a significant increase in the buy volume in the month of Sept that formed a resistance at USD 0.803. The pattern saw a bear rally to the levels of USD 0.28. We expect such a sluggish trend to continue in the month of April,2019 whereby the levels of USD 0.277 will provide a base for an uptick. The 6-month target is expected to the previous resistance of USD 0.803, based on the previous 6-month cycle that had a similar behavior.
Entry Point: USD 0.273
Exit Point: USD 0.803
Stop Loss: USD 0.23
Indicator
Stochastic Oscillator (22=%k, 9=%D)
The stochastic oscillator is used to detect the overbought and oversold regions taking into account the closing highs and lows.
For the period of 22 days, we say that %K line (Blue line) is crossed by the %D (Orange Line) the fasting moving average of 22 days line at an uptick.
The %K line will see a peak decline based on historical oscillation. The blue line will be crossed by the orange %D line at a bull trend which will lead to a declining trend at support levels
Long Term Outlook:
Time Frame: May 2017- Present
Analysis: 1 Year
Pattern Behavior
Historically the resistance levels have seen a considerable change after every 6 months. The stability in the coin trend was realized after a considerable fall in the resistance level from USD 3.33 to USD 1.23. At the levels of USD 1.23 the coin finds its long-term resistance and stable support level at USD 0.23.
The coin enjoyed the honeymoon period at the levels of USD 3.33 in the month of Jan-Feb,2018. After which it returned to its original levels of USD 1.23.
Further the trend will test the levels of USD 0.80 in the long term from the current support levels.
Entry Point: USD 0.28
Exit Point: USD 1.23
Stop Loss: USD 0.19
Indicator:
Bollinger Bands: (Period: 31 Days; Std Dev=3)
The pattern shows a strong mean reverting property. The price does not fluctuate significantly from its mean price and hence the spread between the upper band and the lower band is close to zero. The significant spread was seen in the month of Jan-Feb,2018 when the coin touched a high of USD 3.33
The coin will see a significant deviation from its mean price soon and will again test the levels of USD 0.80. The prediction is based on the constant decreasing volume at its mean price which indicates that a plunge in the price from the current support levels will ultimately increase the volume delivery and thereby increase the spread between the upper and the lower band.
Expect the price levels of USD 1.3 with support at USD 0.21 for a long-term view. A small deviation from its mean price from the current level should increase responsiveness of the bands to oscillate at a higher spread. This is fearsome as the difference can test the past levels of Jan-Feb,2018 at USD 3.33 with a 66% negative change from such a level that was seen empirically.
Hence the investor should be cautious to exit his/her position at levels of USD 1.3 and keep a stop loss at levels of USD 0.19
Note:
The above analysis is highly subjective and the author takes no responsibility for the loss incurred by the readers.
Any idiosyncratic news might affect the coin price.
The indicators used in the article are in accordance to the time frame and coin behavior.
Written as on: 24 March, 2019
Raj Goratela
Technical Analyst
