As promising as the fundamental story behind Ripple is, the chart says something else. It is important to remember that order flow and price patterns can provide important clues about the direction of any financial instrument, especially over shorter time horizons. That is why it is not a good idea to make investment or trading decisions on fundamentals alone. And right now, Ripple is presenting a bear flag formation which means lower prices are likely to follow.

Structure Favors Bears.
Positive sloping parallel trend lines present a bear flag.

Observe the positive sloping parallel trend lines. This is a typical bear flag formation that often preempts lower prices. A close below the .30 level will confirm the pattern.

The question is how low will it go? There is a clear support level at .28, but .25 appears to be the nearby level that carries more weight. This is where price reversed sharply back in 2018. The market has a “memory” and participants that missed the rally off that support are more likely to view that as a chance to get in at a good price. The key is to WAIT for price to confirm a reversal upon any test.

Can it go lower? Sure. Anything can happen, especially if Bitcoin tests the 3K area (range low). Bitcoin is still the leader in this space and the majority of the alts are still highly correlated to it.

A cheap alt coin such as Ripple is a better candidate for position trades and inventory management compared to shorter time frame swing trades. If you are holding Ripple for the long term, then this retrace may present an opportunity to accumulate BUT remember, the broader structure is NOT favorable for longs.

Cost averaging during unfavorable conditions carries greater risks and presents more psychological challenges that increase your chances of becoming a weak hand. Remember it is better to miss the bottom and buy when momentum is on your side.

Overall, Ripple is poised to go lower. The broader structure still maintains its bearish configuration and that means patience, caution and defensive strategies will serve you better under these conditions.

If you are out of the market, the .25 level may offer a lower price to begin accumulating, but be prepared to take pain. Buying near lows is a best practice, but you must be prepared for even lower prices unless the market proves otherwise. If you carry inventory, and you want to add, at least wait for a confirmed reversal off of a support level. The more conservative choice would be to avoid any new positions until the broader structure tells a more bullish story. Perhaps when Bitcoin breaks out of it’s own range at 4500?

Questions and comments welcome.

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