The XRP price has been falling rapidly since reaching a high of $0.79 on Nov. 24. Despite a sharp drop, XRP should reverse trend near the support levels outlined below and eventually begin to move upwards again.
Long-Term Movement
The XRP price has been increasing since it initially broke out from a long-term descending wedge in Jul 2020. However, the price initially consolidated, before the rate of increase intensified during the second week of Nov. The price reached a high of $0.79 on Nov. 24.
Measured from the all-time high price in 2018, the closest significant Fib resistance area is at $1.34, the 0.382 Fib retracement level.
Despite the potential long upper wick in progress, technical indicators on the weekly time-frame are still bullish, supporting the continuation of the upward movement.
Current Rally
The daily chart better shows the move of the past week. In the four days following Nov. 21, the price increased by a massive 153% but has since decreased by nearly 40% in the past two days.
Currently, the price is trading just above the 0.5 Fib retracement level at $0.48, while the 0.618 Fib level is right below at $0.41.
Despite the drop, technical indicators are still bullish.
The shorter-term two-hour chart shows that the 0.618 Fib retracement level is also a horizontal support area, making it likely to act as a reversal area.
Furthermore, there are no bullish reversal signs in the RSI or the MACD, even though both are oversold. Therefore, it would make sense for the price to continue dropping before eventually resuming its upward trend.
Wave Count
The most likely count for XRP suggests that the price began a bullish impulse (shown in white below) with a low reached on March 13, confirmed by the 1/2-1/2 wave formation that followed.
If accurate, the price is now in an extended third wave, currently trading in sub-wave four (orange). Using the extension of sub-wave one, we can find a possible target of $0.92 for the top of the movement.
However, since the target depends on where sub-wave four will end, it’s still only a preliminary target that might not be that accurate.
A decline below the wave one high at $0.33 (red line) would invalidate this particular wave count.
Possible Bottom
The possibility that the XRP price is in a bullish impulse is strengthened by the fact that the price has broken out from a parallel ascending channel.
The fourth wave often revisits the middle of the channel in what is known as a 4th wave pullback before eventually resuming its upward movement.
The middle of the channel is between two important fib levels at $0.33 – $0.43.
We can take a closer look at the formation of sub-wave four to narrow the range for the possible bottom. The fourth sub-wave is taking place inside an A-B-C corrective structure (blue).
If the A:C waves have a 1:1.61 ratio, which is common, the price would reach a low of $0.403. Therefore, the $0.403 – $0.433 area is especially likely to act as the bottom.
Conclusion
To conclude, the XRP price should reach a bottom between $0.40 and $0.43 before eventually resuming its upward move towards $0.92 and possibly $1.34.
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