XRP price bound for another dip before 40% rebound

Ripple price came down 20% since the beginning of this week.
With some upside today, bulls stand to face a bull trap that could get quite painful.
A better entry point at $0.78 looks to be more promising for bulls.

Filip Lagaart FXStreet

Ripple (XRP) price could not withstand the correction that has gone through the cryptocurrencies this week. Several significant cryptocurrencies and alt-currencies were on the downside, with prices retreating to fundamental support levels. The bulls in XRP seem to have jumped the gun, not waited for any support level, and just caught a falling knife. A possible wash-out of buyers could happen as sellers are still very much in control.

XRP price is still in favor of sellers

This week, Ripple price has felt the weight of a downturn with a break of a significant green ascending trend line that has kept the bull run going throughout the summer. With the break of that trend line, sellers are very much in control, and bulls are looking for some good entry levels. With the reversal already today, that might have been just a tad too soon. The entry at $0.84 only goes back to August 6 and has not withstood any past tests or cannot give any proof of importance. It looks as if buyers have caught a falling knife, and the false break on the 55-day Simple Moving Average (SMA) at $0.95 could spell trouble for buyers that went in long in full conviction and full size.

XRP price risks turning into a bull trap now with buyers not able to push beyond that 55-day SMA. Price will reverse, and sellers will push XRP another leg lower toward $0.78. That might be a more exciting level. From the chart in XRP, the $0.78 level holds more importance than the $0.84 level. Originating from June 7, his level has shown quite a few tests from both upside and downside, making it a better historical element to keep in mind and could act as a better entry point for bulls to go in for a long.

XRP/USD daily chart

Ripple price thus looks to be heading first for another leg lower toward $0.78, before bulls really can take over from sellers and ramp up price action again in the cross-border currency. A kick-back to $1.05 looks to be the first port-of-call in the next bull run to unfold.

In case Ripple stays in the disfavor of investors, expect a forceful push lower toward $0.60. That brings XRP back to the region suitable for a fade-in over the longer term before price action will choose the upside again.