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XRP Technical Analysis - XRP Coin

XRP Technical Analysis: Is XRP Price Performance Decoupling From the Rest of the Market?

Quick take;

  • XRP fails to keep up with the cryptocurrency market in terms of USD price returns indicating that the price prospects of the third-largest cryptocurrency by market cap are weak
  • XRP has been consolidating for several months in terms of USD price returns and has failed to keep up with the bullish price performances recorded in other top cryptocurrencies during the week
  • XRP has been recording steep declines in terms of BTC returns reflecting its failure to keep up with the returns of other top cryptocurrencies

If you are interested in reading more Technical Analysis, feel free to look through our blog and also our most recent Technical Analysis of Ripple (XRPUSD): April 2019.

XRP is the cryptocurrency of the XRP ledger, a distributed ledger technology which has a reported market cap of $13.1 billion. This ranks the XRP network as the third largest in the cryptocurrency industry. However, recent reports find strong evidence to suggest that the market cap of XRP  is overstated and weak price action for the past six months would suggest that XRP has a high chance of continuing its weak price performance or even experiencing a considerable depreciation in USD price. The most feasible factor that would support XRP moving to the upside in terms of USD price is the recent strong performance of other cryptocurrencies such as market bellwether bitcoin. With research showing major cryptocurrencies to be highly correlated, the price of XRP may very well increase in response to the rest of the market increasing. However, the prospects for XRP appreciating in terms of BTC appear highly unlikely in any case.

XRP Technical Analysis: XRP USD Returns

XRP Technical Analysis - XRP USD Returns

XRP recorded an extraordinary price performance during the past bull market forming an all-time high of $3.31 in January of 2018.

After a significant depreciation from these high points, XRP has been recording an unusually long period of consolidation.

The past six monthly candles (inclusive of the current month) have been forming as Doji candles reflecting high levels of uncertainty from traders.

Despite more volatile movements in the recent price action of other cryptocurrencies, XRP has remained in its prolonged consolidation.

XRP Technical Analysis - Weekly Chart

The weekly chart also shows an unusually high number of Doji candles being recorded.

The movements in the RSI and MACD reflect the long period of consolidation.

Both are trading flat indicating that there has been no dominance from either buyers or sellers.

$0.2475 is a longer-term level which will likely hold significant important if sellers were to push price action down to this point.

$0.2475 acted as an important area of selling pressure from May to December of 2018.

Once price overcame this level in December of 2018, it recorded a phenomenal price increase of 1367%. The starting point for an increase of this magnitude holds significant weight in influencing future price action.

XRP Technical Analysis - BITSTAMP Chart

Despite a phenomenal price performance from bitcoin this week where the cryptocurrency market leader formed consecutive 2019 highs, XRP has failed to keep up with the returns recorded by other top cryptocurrencies. XRP consolidated almost the entire week, only recording a significant appreciation yesterday.

The failure of a major asset to keep up with the performance of the market has negative connotations for future price performance. It indicates that when the market moves to the downside, the asset is set up to experience a decline to a far greater extent than other assets in the market.

The price did record an increase of 8% yesterday. However, this is being followed up by a loss today reversing some of the increases recorded.

The daily 200 SMA (in black on the daily chart) may be noted as holding importance. The increase recorded yesterday found selling pressure at this point.

The 200 SMA is often used by analysts to gauge the direction of the long-term trend. Most major cryptocurrencies have moved above their 200 SMA during the recent price increases indicating the start of a bullish trend.

However, XRP remains below and its price performance may be decoupling from the overall market. The 50 SMA (in yellow on the daily chart) has been trading flat reflecting the long periods of consolidation.

XRP Technical Analysis: XRP BTC Returns

XRP Technical Analysis - XRP BTC Returns

For BTC returns, XRP has been steeply declining reflecting its underperformance in comparison to the market leader.

The current week is the eighth consecutive loss recorded in XRP against BTC.

The price previously found buying pressure twice at the 4179 satoshis (sats) level.

Although the price is approaching this level, it seems unlikely that price will find buying pressure at this level given the high levels of selling pressure.

Both the weekly RSI and MACD have been steeply declining reflecting the high levels of selling pressure over the past eight weeks.

XRP BTC Daily Chart

The daily chart for XRP against BTC further reflects the high amounts of selling pressure in the market.

The daily RSI and MACD have been trading downwards similar to their movements on the weekly chart.

Although the RSI and MACD are lagging indicators, this suggests that the momentum is predominantly with sellers.

The 50 SMA and 100 SMA (in red) are trading downward confirming that the short-term and medium-term trends are to the downside. The 200 SMA is also beginning to turn to the downside after the steep losses of this week. This could be setting XRP for a significant decline in its BTC valuation.

XRP BTC 4 Hour Chart

Price action on the 4-hour provides a more detailed look at the bearish performances recorded during the past week.

Price action was comprised of impulse movements to the downside intervened by periods corrective movements and consolidation.

The impulse movements are represented by the large red candles recorded for short periods and irregularly.

These movements are intervened mostly by periods of consolidation.

Any corrective movements failed to recover any substantial amount of losses indicating the trend is dominantly to the downside.

Such price action is highly characteristic of a bearish trend.

XRP Price Prospects

Despite months of consolidation being recorded in the price performance of XRP in USD terms, the price performance in BTC returns illustrate an entirely different outlook.

Steep losses in BTC returns recorded over the past eight weeks demonstrated XRP’s inability to keep up with other top cryptocurrencies.

The dominant downward trend and high levels of selling pressure increase the odds that XRP will continue its underperformance for BTC returns.

It also looks likely that the XRP may end its long period of consolidation in terms of USD returns with a significant move to the downside.

Our XRP Fundamental analysis would support this outlook. Also, we have a later technical analysis of Ripple July 2019.

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