XRP price has dropped to a crucial support but a relief rally to $0.33 could be around the corner.
Recently, cryptocurrencies and Bitcoin (BTC) have seen a significant drop. Bitcoin was not the only crypto to see a steep fall as other markets have seen one as well, including equities which are down between 30% and 40%.
Crypto market daily performance. Source: Coin360
These movements also meant a further drop in altcoins. However, some outcomes have been doing slightly better than Bitcoin in recent weeks and one of them is XRP.
XRP price on final USD support before $0.06
XRP USD 1-week chart. Source: TradingView
The XRP/USD chart shows many comparisons with the previous cycle, but it also indicates that the price is resting on the final support before a huge meltdown. The price of XRP dropped below the support of $0.15 intra-week (as it hit $0.10) but closed above the support of $0.15 with the weekly close.
Through that, XRP price is holding the $0.15 support at a significant level. Losing this area would kickstart a further drop to the next support at $0.06. Moving towards $0.06 would cause the price to make a drop of 60%.
XRP USD 1-week chart. Source: TradingView
Fractals generally don’t mean much, but it’s interesting to see that the price of XRP is acting the same in the previous cycle. During 2015, the price of XRP came back to the last support for confirmation.
A similar move is occurring right now, but this test for confirmation took twice as long as the price came back to this level after 118 weeks. In 2015 the test took 53 weeks.
What can be concluded from this? Not much, as the price could easily fall below this level and continue the bear market. However, a natural conclusion can be drawn that this cycle is going to take longer than the previous one.
This is not the wrong thing to see. The bigger and more mature a market becomes, the longer new cycles take. With Bitcoin, the cycle of 2014-2018 took four years, while the cycle before that took two years. It makes sense that the current cycle would peak out in 2024-2026 as the market is maturing.
Comparing that to the chart of XRP, we can see that this cycle is taking longer, as this level is retested after two years rather than one year. A positive note is if the price copies the movements of 2015, a surge to $0.33 is possible in the upcoming weeks.
Is the correlation back between XRP and BTC?
XRP BTC 1-day chart. Source: TradingView
A common occurrence during 2017 and 2018 was the inverse correlation between XRP and BTC. Once BTC started to rally upwards, the XRP/BTC pair dropped. The moment BTC began to drop south, XRP/BTC jumped upwards.
Lately, this correlation disappeared, and XRP used to move alongside Bitcoin, until last week when Bitcoin witnessed a massive crash from $7,500 to $3,750 within one day. As a result, many altcoins saw a significant drop in their BTC pair as well, but not XRP.
During these following days, XRP/BTC gained 23%, balancing their USD value. As stated previously, the weekly candle held the vital support of $0.15, mainly due to the strong bounce in the BTC pair.
What else does the chart show? There was an immediate rejection at the 0.00002900 satoshis level, as the price dropped down. Similarly, the price of Bitcoin has rallied in the past 48 hours, reaching $5,900.
This strong upside move from Bitcoin caused the XRP/BTC pair to drop massively, as the pair is approaching the 0.00002600 satoshis support level again.
What should XRP investors watch for?
XRP BTC 1-day chart. Source: TradingView
One of the essential things to watch for is the correlation between XRP and BTC, as discussed in the previous section.
However, the XRP/BTC pair shows a descending triangle structure. There’s strong support found in the green zone, which is found between 0.00002450 – 0.00002550 satoshis. As long as that support holds, it will provide a significant entry.
The resistances of this range are mainly found at 0.00002800 – 0.00002900 satoshis and 0.00003150 – 0.00003300 satoshis, alongside with the descending triangle trendline.
As the chart is showing, a breakout of the trendline could take until May or June of this year. But, the moment that XRP breaks through the trendline and breaks above 0.00002800 – 0.00002900 satoshis, a clear rally is on the tables with targets of 0.00003800 satoshis. Such a rally would mean a surge of 45% from the current prices.
XRP/USD pair is at a crucial area
XRP USD 1-day chart. Source: TradingView
For the XRP/USD pair, the $0.15 level is a crucial level to hold, as discussed previously. The primary resistance to break is the red zone between $0.182-$0.195. As long as that area remains resistance, there’s no reason to be bullish on the chart.
However, what investors would want to see is a bottom formation like the period in December 2019, shown by the blue rectangle.
Through that, a period of sideways movements occurred in which a support and accumulation range was established. After this, the price of XRP started to rally significantly.
A similar situation would suit the price well, given that it’s on its final support before $0.06. Holding this area and testing the $0.182-$0.195 area would be an exciting development.
An apparent breakthrough of the $0.182-$0.195 resistance area would mean a surge towards $0.32-$0.35 as the next move. If that occurs, then we’ll see XRP copying the previous cycle, but only a bit slower.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
