XRP tumbles below major support but finds buyers, a bear trap could rally Ripple to $1.50

  • XRP price fell and closed below the 2021 Volume Point of Control, triggering intense selling pressure.
  • While the overall technicals point to overwhelming bearish conditions, certain variables may indicate that a bear trap is developing.
  • Trapping aggressive short-sellers could be the catalyst needed to rally XRP above the Cloud.

XRP price falling below the 2021 Volume Point of Control was the first significant sign that selling pressure was likely to take over during the Wednesday session. The pressure on the short side of the market was compounded when XRP and closed below both the Cloud and the bull flag. The road to lower prices is clear, but XRP could easily trap short-sellers if it closes above some key levels.

XRP price drops over 10% on Wednesday but has rallied as much as 8% during the Thursday trade session

XRP price has returned inside the Cloud on the daily Ichimoku chart, creating unfavorable conditions for trading. It is difficult to determine a bias when an instrument is inside the Cloud because the Cloud represents uncertainty and volatility. Point and Figure charts clean up the ‘noise’ on Japanese candlestick charts and provide a clearer-cut view of where entries can occur and the appropriate reward for risk.

XRP/USD Daily Ichimomku Chart

On the short side of the trade, the hypothetical trade setup is an entry at $0.94, a stop loss at $1.02, and a profit target at $0.62. The profit target is determined by the vertical profit target method in Point and Figure analysis. $0.62 may be too ambitious of a profit target and not entirely realistic, so a two-box or three-box trailing stop would help protect any potential profit made on the short side.

XRP/USD $0.02/3-box Reversal Point and Figure Chart

The hypothetical short trade idea is invalidated if XRP price returns to $1.12.

On the long side of the trade, the hypothetical trade setup is a buy limit/buy stop at $1.06, a stop loss at $0.98 and a profit target of $1.50. The entry is based on the 50% retracement from the Point and Figure pattern known as a Pole Pattern. The profit target of $1.50 is based on a high volume node in the volume profile and the expected momentum break that would occur if XRP price can crack above the neckline of the inverse head and shoulders pattern.

XRP/USD $0.02/3-box Reversal Point and Figure Chart

The hypothetical long trade is invalidated if a new O-column develops and moves below $0.94.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

XRP Price Prediction: Ripple can dip to $0.50

A brief technical and on-chain analysis on XRP price. FXStreet's analysts evaluate why Ripple could drop lower. 

More Ripple News

Ethereum price set to break below $3,000 as crypto bloodbath persists

Ethereum price is still under pressure from the red descending trend line. ETH price is set to break $3,018, bringing the price below $3,000. Expect a further continuation to go hand-in-hand with current financial market sentiment.

More Ethereum News

MATIC price to present a buy opportunity before Polygon rallies

Polygon price action is still stuck in an upward trend channel. MATIC’s current level looks a good buy near the lower end of the channel. Expect a return to the middle of the channel or swing to the upper band once global markets turn green again.

More Polygon News

Crypto.com hits two-month lows as selling pressure accelerates

Crypto.com price is within range of its final support zone before it could move into the $0.30 value area. Bears are in control and have been fighting to push CRO lower, but bulls have persisted.

More Crypto.com News

BTC eyes retest of $50,000

Bitcoin price shows a resurgence of retail interest as it bounced off a crucial psychological level. The recent uptrend is preparing a base on a short-term time frame so BTC can kick-start a larger leg-up. Interestingly, on-chain metrics are lining up with the bullish outlook portrayed from a technical perspective. An uptrend now seems inevitable for BTC and, therefore, the larger ecosystem.

Read full analysis