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Charting the course of XRP


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Given today's action, I thought this warranted a new thread since I don't want to keep distracting from the excellent content in @Eric123's thread.

So first some thoughts.  It is funny because I predicted a drop to $0.24-0.26 and still was surprised and a little jolted by the drop.  Probably the suddenness of it that rattled me, which reminds us that we are still playing in a very manipulated market.

Now, what did this drop mean for XRP?  We finally broke a long term support at $0.28, which you could certainly see as a bad thing.  We did find support at a second level, right around $0.24, but this is a much less tested support and thus less significant than the old $0.28 line.  We dropped briefly below it but did fight back up with decent volume, which is something.  Our new support line goes way back oddly enough to almost exactly one year ago. 

Two things can happen here.  The first (and I think more likely) is that we go back down and test again (double bottom), followed by a "relief rally" that should take us back up to $0.30-$0.36.  Oddly enough, if you are a trader, that represents around a 25% return if you have the cajones to make the trade.  The second scenario is that we break down below the $0.24 level with volume and then, I would say, we are in a bit of trouble.  Not a lot of support down below and I think this would really damage the psychology around XRP, possibly crypto in general if the drop is widespread.  I am holding some money ready to deploy here but I'm not buying quite yet.  If it does fall like that, then the doubt of "throwing good money after bad" starts to become a little more prevalent.

That said, and this is the important part, nothing has fundamentally changed with XRP except the price.  It is still the best crypto from a technological standpoint, still the only one with any sort of real adoption, and Ripple is still making good progress on continuing to grow its use case.  If you were unable to see the price, only the news, you'd probably feel pretty good about your investment!

More to come but the chart below depicts our new best friend, the $0.246 line.  One point to note: we are obscenely oversold on 15 min, 4H, daily, whatever time frame you want to look at it.  If rationality wins the day, now is a good time to buy.  I am a bit of a cautious fellow, so I'm going to watch a little bit more, understanding that I may be missing an opportunity to add to my position at an excellent price point.

m51WegBY

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Now, we can take a look at the BTC dominance ascending wedge that I have been watching started on the other thread.  We bounced right off of the lower trend line, which really confirms for me that this is a real pattern worth watching.  Now, I don't like at all how we did it (alts dumping even worse than BTC) but it still validates the pattern.

I expect that we will now make our way back up towards BTC dominance around 70-71% (hopefully this will be because BTC rallies a little more than everyone else and not drops a little less than everyone else). 

For those that don't know, this ascending wedge pattern is ultimately a bearish pattern that looks set to complete mid-late September.  This would (hopefully) mean alt season approaches.  I would very much prefer that it does so with BTC showing strength.  I've never been much of a fan of BTC but I am right now.

27rFTpRi

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Another take way from today: BTC has been framed as having an inverse correlation to the stock market, rather like gold, and I do not agree with that assessment at all.  Today is good proof of that; the stock market took quite a hit and so did BTC.  I don't think there is any reasonable correlation between the two and we are a long way from BTC being viewed as a safe haven asset.   It is a "risk on" asset, just like stocks.  Nothing that can drop this far, this fast, can be considered a safe haven.

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Thnx Molten!

I can't say anything better then "let's see what happens"

What does make me wonder is

4 minutes ago, Molten said:

One point to note: we are obscenely oversold on 15 min, 4H, daily, whatever time frame you want to look at it.

How do you (not you perse, but an analist) decide when something is oversold. I've heard the 'we are oversold' when we we're bouncing around 30 cents also, yet there was a massive sell.

What metrics show being oversold on a chart? Orderbooks?

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Good question. I look at Bollinger Bands mainly with the moving average.  Let's take a look at the 1H for example:

z6faVz4Y

See how far outside we are from the bottom of the green band?  Let's zoom out a little and you will see how often there is a correction (either up or down) when we get outside of the bands at all, let alone this far out:

veD9EdSn

You can see every time we get outside (usually the upside in this case) there is a big sell off to bring us back down.  Same thing applies here.

People who were saying that we were oversold when we were around $0.30 were saying that more from a fundamental (or more likely emotional) standpoint.  They wanted to believe that XRP was "worth" more than $0.30, taking into account their expectations of what the future price would be.  Markets may not be rational (and crypto is surely not a rational market) but the price is what it is.  That being said, I can't find an instance in the last year or more where we have fallen this far outside of the bands.  Oversold - this is not any sort of guarantee that we will bounce, but I think it likely that we will.

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Last last thought for now.  This drop below support, in my view, was absolutely necessary for XRP if it is going to have a big run.  Note that I am not saying that it means that we will have a run, just that it was necessary to launch us.  I think the Wyckoff people would agree with me here, but I don't pretend to understand that stuff.

Now we wait and see if the drop was both necessary and sufficient....

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4 minutes ago, Molten said:

Last last thought for now.  This drop below support, in my view, was absolutely necessary for XRP if it is going to have a big run.  Note that I am not saying that it means that we will have a run, just that it was necessary to launch us.  I think the Wyckoff people would agree with me here, but I don't pretend to understand that stuff.

Now we wait and see if the drop was both necessary and sufficient....

why was it necessary? can't we just continue to say we need to drop to 10 cents if this were to run again?

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It's not quite a prerequisite but if you look at the charts for BTC and XRP, the big runs are preceded by ~20% dips just before the take off.  Perhaps it was a bit strong to say that it was "necessary" but it is a common theme and one that I expected.  Now we just have to wait for the follow through.

You won't hear me saying that we need another big drop from here.  I view this as a critical moment for the near term price action.  Any more dropping from here spells trouble.

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Here's a good graphical representation of why a dip precedes a run.  This is actual real life, looking at short interest on XRP.  Presented with no further commentary:

skMdv9zL

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Geez, that chart I just posted made me go and buy more XRP... there's nothing I savor quite more in life than being a contrarian.  Here's hoping those short sellers get REKT.

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Yes, rather along the lines I was thinking.  Notice that if we follow the textbook, there will be another test of support around $0.246 and then off we go.  Or, and this feels like a disclaimer that I am making more often, everything goes to Hell in a hand basket.

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