Is Ripple Forming a Short-Term Base?
- Ripple sitting just above $0.25
- Flat over the last week
- Oversold condition
Ripple has been relatively soft for quite some time, but over the last week or so we have seen it stabilize at the psychologically and structurally important $0.25 level. When looking at the longer-term charts, Ripple has done almost nothing after the crypto meltdown. At this point, it’s very likely that we have a couple of different possibilities here: we either have a longer-term consolidation area that is starting to attract order flow, or we have “dead money”. There’s even the possibility that it’s a little bit of both for the time being.
Do you believe in crypto?
Ripple, perhaps more than just about any other coin, is an excellent proxy for what people believe about cryptocurrency. At this point, it hasn’t really done much from a longer-term perspective, but we have seen Bitcoin and a few other crypto coins rally. There has been a bit of a slight drift lower over the last couple of months, just as we have seen in Bitcoin. However, Ripple never participated in the massive shot higher.
At this point, if the rest of the crypto markets rally again – and it does look as if Bitcoin is trying to do exactly that – logic dictates that Ripple should eventually catch a bid as well. This is a market that shows a lot of promise due to the fact that it could be adopted by financial institutions. Simply put, Ripple could have a massive catch-up moment in relation to other cryptocurrencies if it all takes off again.
The technical analysis for this pair is that we are hovering above $0.25. And that’s the point in that statement: it’s a currency pair. The fact that the U.S. dollar has seen a lot of strength has given a little bit of downward pressure. That could give you plenty of time to build up a large position, especially considering how cheap Ripple is.
The 50 day EMA is just above the $0.30 level and could offer a bit of technical resistance. Above there, we have the 200 day EMA at roughly $0.35, which of course will also offer resistance. We had recently crossed lower and the so-called “death cross”, but quite frankly I would ignore that at this point because the market has been flat enough that eventually the moving averages had to cross.
The trade going forward
When it comes to Ripple, it’s not so much a trade as it is an investment. Think of it this way: for just $25, roughly, you can own 100 XRP. Think of it as “a flyer” based upon crypto. This is one of those things that is much like a penny stock. In other words, it’s cheap, but it could really start to take off. The downside is somewhat limited, as we can only go to zero. If the entire crypto space takes off again, Ripple could be an important part of your crypto portfolio. While I wouldn’t jump “all in”, you could make an argument for owning some.