Ripple’s XRP token may have found a short-term top and there’s potential for a sustained pullback in prices, price charts suggest.
As per data source OnChainFX, the world’s second largest cryptocurrency by market value is down 15 percent from a record high of $3.84 set yesterday. Over 24 hours, XRP is down 10 percent.
A look at the top 10 ripple markets shows that the sharp retreat from the yesterday’s high is mainly due to losses in the XRP/KRW (Ripple-Korean won) pair. Also, profit taking in XRP/BTC (Ripple-bitcoin) may have played a role in dragging down XRP.
While the price action looks toppy, the technical charts indicate there is scope for a deeper pullback. As of writing, XRP is trading below $3.00 on western exchanges, while, in Asia, the price is still well above $3.50 levels.
The above chart (prices as per Bitstamp) shows:
- A doji candle indicating bull market exhaustion.
- A potential bearish doji reversal. A close (as per UTC) today below $2.512 (previous day’s low) would confirm a short-term bullish-to-bearish trend change.
- The relative strength index (RSI) shows overbought conditions.
The above chart shows bearish price RSI divergence (lower highs on the RSI) and falling tops as represented by the descending trendline on the price chart.
Meanwhile, the rising trendline could offer support at $2.35 levels.
- Yesterday’s doji candle indicates Ripple may have found a short-term top.
- Confirmation of a bearish doji reversal (close today below $2.51) would open doors for a break below $2.35 (rising trendline support on the 4-hour chart). XRP could then test support at $1.7785 (50 percent Fibonacci retracement) and $1.61 (Dec. 31 low).
- Only a close (as per UTC) below $1.4154 (61.8 percent Fibonacci retracement + daily rising trend line support) would be read as long-term bullish-to-bearish trend change.
- Bullish scenario: XRP could set fresh record highs over the weekend if prices hold above $2.59 (23.6 percent Fibonacci retracement) in the next 24 hours.
The topping pattern seen on the XRP/BTC chart adds credence to the bearish case put forward by XRP/USD (discussed above) and the rise in bitcoin seen today.
The close today below BTC 0.00016276 (yesterday’s doji candle low) would confirm a bearish doji reversal and could yield a pullback to sub-0.00010 BTC levels.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.