For the past thirty weeks, the XRP price has been steadily increasing. Its rate of growth has significantly outpaced that of Bitcoin BTC). Therefore, the XRP/BTC pair has seen notable growth.
In early September, the XRP price reached an almost two year low of 4233 satoshis. Since then, it has been on an upward trend.
Crypto trader @imbagsy looked at the XRP chart and expressed disbelief at individuals who were shorting XRP.
This is the weekly $XRP chart on Bitmex.
Why in god’s name is anyone shorting this? pic.twitter.com/hxxFC5gpOG
— Bagsy (@imBagsy) October 14, 2019
However, it is worth noting that he only used the BitMEX chart — which is very limited in the amount of prior data and contains less than two months of the previous price action.
While we are neither advocating shorting nor longing it, let’s look at possibilities as to why someone may want to short XRP.
XRP Price: Running Into Resistance
The first thing we can notice when looking at the XRP chart are the two resistance areas. While the price has reached the first one at 3550 satoshis, the second one is at 4000 satoshis.
Also, the XRP price is following an extremely steep ascending support line.
During the duration of this support line, the XRP price has increased by 48 percent in a span of only 30 days. This does not look sustainable for the long-term. Rather, a breakdown from this line and a more gradual increase seems more likely.
Another reason for shorting XRP would be the presence of bearish divergence.
We can see a double bearish divergence developing in the RSI — both long and medium-term.
Additionally, it seems like the XRP price might be creating an ascending wedge — which is a bearish pattern.
Bearish divergence combined with a bearish pattern, in most cases, causes the price to break down.
Too Many Bullish Candles
Finally, the current weekly candle is the sixth bullish candle in a row.
Throughout XRP’s entire history, there has been only one occasion in which there have been six bullish weekly candles in a row — and none where there were seven or more.
This occurred throughout October 2018 and preceded a year-long downtrend.
While the fact that there has never been such a long bullish period without any kind of retracement does not mean that one will not transpire, when we combined this with the daily outlook, a retracement seems to be imminent.
Do you think shorting XRP is the right move at the current level? What about going long, or staying neutral? Let us know in the comments below.
[Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.]
Images courtesy of Twitter, TradingView.