Disclaimer: The results of the following analysis are the author’s opinions only and should not be considered investment advice.
XRP has been doing incredibly well over the past few days. It gained nearly 30% over the past week alone, due to the rally from $0.32 to $0.42.
tidy coin Seventh on CoinMarketCap With a market capitalization of $20.16 billion, it was a remarkable boom. Looking ahead, can the bulls maintain the momentum, or will range-bound price action likely continue?
XRP – 3 Day Chart
The three-day time frame showed that the market structure has taken an upward turn. The price formed a range (yellow) between $0.42 and $0.31.
In August, XRP rose above the mid-range value but was unable to close the 3-day candle above $0.38. At the time of writing, it appears that the most recent and ongoing candle may close above the August highs.
If this happens, then the D3 structure will turn bullish. Patience may see bulls pay off, especially if XRP succeeds in flipping range tops for support.
However, until that happens, trading within the range may be a safer mindset for the trader. In general, a range continuation occurs more regularly than a strong breakout.
On the daily time frame, the market structure has already assumed a bullish bias. However, this can lull buyers into a false sense of security. An upward move to test the $0.42-$0.45 area for liquidity before a sharp drop as well.
Price seeks liquidity, and such a move may force short positions to close at a loss, as well as convince marginal traders that a breakout is imminent. A sharp fall towards $0.36 and $0.34 could force the same buyers to sell at a loss and add more downside momentum.
While this scenario could happen, a breakout beyond $0.42 is what indicators have suggested. The OBV has been in a series of higher declines since mid-June, pointing to the steady demand behind XRP. The RSI was also above neutral 50 to show heavy bullish momentum.
In what way can XRP lean? Revisiting $0.42-$0.45 may be a selling opportunity that is more likely for a deviation above the range, rather than a buying opportunity in anticipation of a breakout. However, indicators showed a bullish bias.
In conclusion, a risk-averse trader can choose to wait for the rejection at $0.42 – $0.45. Alternatively, traders who are more comfortable with risky conditions can look to enter short positions within the $0.42-$0.45 region, with take profit targets of $0.36, $0.34 and $0.31 and stop loss above $0.45.