Long Term Outlook For XRP-USD; October 4, 2018 – XRP USD (Cryptocurrency:XRP-USD)

Ripple (XRP-USD) has had a difficult time for the greater part of 2018, and this is reflected in the price being stuck in a very tight range at well below its previous highs. However, positive news in terms of adoption have hit the markets, and have spurred a renewed round of buying optimism.

Fundamental Outlook

October 2018 kicked off with the Ripple Swell Event, which featured former US President Bill Clinton as one of the guest speakers. This event, held in San Francisco, is aimed at building on the recent gains seen from the launch of its xRapid product.

xRapid is a low-cost financial product from Ripple Labs which is designed at enabling on-demand liquidity at transaction stations in emerging markets, which ultimately cuts the costs associated with wire transfers and remittances in these markets. xRapid has been tested with remittance providers and banks for some time now and Ripple has confirmed several already-existing partnerships with its product.

Technical Outlook

The price action from May 2018 to September 2018 formed a falling wedge, which eventually found resolution 2 weeks ago with a strong performance in the 3rd week of September. This bullish breakout saw the price surge from a price of $0.2312 to $0.7931, representing an increase of nearly 243%. However, profit taking form that surge pushed prices down to $0.5714. The selloff continued into the last week of September, before a renewed round of buying pushed prices up. This is what the chart looked like at close to the end of the week:

XRP/USD Weekly Chart: September 28, 2018

There are basically two key points to take away from this chart:

  1. Ripple had got to a point where prices fell into either an oversold point or just too cheap to pass up. In fact, prices were so cheap, they had fallen almost to the 2017 lows. Buyers saw these prices as a bargain and were able to create enough demand to cause the breakout from the falling wedge. At $0.7931, the price surge was close to the next resistance levels that were seen on the weekly chart in April 2018. This prompted profit taking on the asset, causing a retracement of close to 2/3rds of the initial surge.
  2. The candle for the week that recently ended shows a pinbar whose characteristics tell a story about the market sentiment. There is a long lower wick, which signifies the initial continuation of the selling retracement of the previous breakout week, followed by a rejection of the lows to push prices to present levels. This is indicative of an existence of bullish sentiment on XRP.

Now that the candle for the week has closed as a pinbar, what is the outlook on prices going forward?

Trade Scenario

Price action has opened the week at the same price as the close of last week’s candle. The high price of the breakout candle for the week ended September 23 remains the resistance area to break before significant upside price movements are seen.

Chart for XRP/USD: October 1, 2018

At this point, the trade analysis has to use the daily chart to obtain a clearer picture as to what to expect. There is a bullish pennant in formation, with the pennant component of the pattern presently encapsulating price action. Price is being supported by the ascending lower trendline in the pennant, as well as the 10-day EMA.

It is expected that this pattern will end in a bullish continuation of price action to the $0.80 resistance, if the daily candle breaks above the upper pennant trendline.

Trade Scenario 2:

However, it is also possible that XRP bulls will lose steam and allow sellers to drive prices below the ascending daily support trendline. This will cause prices to retreat down to any of the Fibonacci retracement points identified in the snapshot:

  • $0.48 (38.2% Fibonacci retracement)
  • $0.43 (50% Fibonacci retracement)

It is expected that price will find support at any of these two retracement areas. This is because they are the only retracement points which have seen at least one prior test and successful support of the price candles within the last 2 weeks.

Market Sentiment

The long-term, mid-term and short-term outlook of the XRP/USD pair is:

  • Long-Term – bullish (may change shortly)
  • Mid-term – bullish
  • Short-term – neutral to bullish

Disclaimer

Please note: this analysis was done on a weekly chart. It takes a whole week for a candle to form, so these moves may take several weeks to play out. Entries should be made on shorter time frame charts such as the daily chart.

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in XRP-USD over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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