Ripple Reaching Towards Top of Consolidation Area
- Ripple forming large rectangle
- 200-day EMA just above
- 50-day EMA just below
Ripple initially tried to rally during the trading session on Wednesday, before breaking down below the $0.30 level again. That being said, the market looks as if it is trying to confirm a potential rectangle. That could be a short-term pullback in the cards, going forward, for the Ripple market.
The XRP/USD pair has initially shown strength over the last three sessions, but above the $0.30 level there is a significant amount of resistance. That resistance extends all the way to the $0.33 level. That is the top of the potential rectangle, and it isn’t exactly uncommon for there to be a “zone of resistance” at the top of one of these rectangles.
The 200-day EMA now sits just below the $0.33 level as well, so it makes sense that the market is going to struggle to get above here and break out. Having said that, if it did, it would be an extraordinarily bullish side.
The 50-day EMA sits just below, so we could get more of a grind sideways initially before a potential pullback. By breaking below the 50-day EMA, it’s likely that the market could go down to the $0.25 level underneath, which is the beginning of massive support that extends down to the $0.22 level after that.
All things being equal, the market does look as if it is trying to carve out a more stable consolidation area. Therefore, more back-and-forth trading is probably what you can expect in the short term.
Beyond the technical analysis on the chart, one should pay attention to the Bitcoin market, being a proxy for the overall attitude of the cryptocurrency markets. Most of the smaller coins will struggle if Bitcoin cannot show strength, so it’s important to ascertain how this cryptocurrency is trading before placing the trade in one of these markets.
The trade going forward
Looking at the chart, the trade going forward is to employ some type of range-bound system.
That being said, if the market does close above the $0.33 level, it’s very likely that it will continue to go higher, perhaps reaching as high as $0.40 going forward. To the downside, if the market was to break down below the $0.22 level, the $0.20 level would be targeted next due to the large, round, psychological significance of that figure.
Until something changes drastically, though, this could be a perfect trading vessel for short-term traders. The market continues to see a lot of choppiness, and if you can sit with your trade, you can do quite well in these types of situations. That being said, for the longer-term trade, the upside makes more sense.