XRP has formed a near text book diamond bottom reversal. Price moves within a diamond formation inside of supports and resistances for up to 6 months (we’re a little over at ~222 days) as volume declines towards the end of the formation before it breaks out. 87% of the time when price breaks outside of the formation it moves 15% - 35% higher. Currently price has broken through the diamond formation, moved above the daily 50MA and is about to test the bottom diamond support line in the next day or two. Technicals favor a move upwards however BTC is still indecisive about what it is going to do next. When BTC reversed off of the 3 year down trend resistance it didn’t sell off further which showed tremendous strength considering the significance of that trend line. XRP has decoupled from BTC in the past but not recently so to be on the safe side I placed a tight stop loss below the daily 50MA and diamond bottom baseline support and will move it up every day accordingly.
The first major resistance that XRP is going to face is the trend line resistance (red) which happens to coincide with the weekly 50MA. This will be my target for selloff (~15% to 20% ROI).
I am going to post my XRP/BTC chart shortly and explain how that ties into this chart.
The first major resistance that XRP is going to face is the trend line resistance (red) which happens to coincide with the weekly 50MA. This will be my target for selloff (~15% to 20% ROI).
I am going to post my XRP/BTC chart shortly and explain how that ties into this chart.
Trade closed: stop reached:
BTC dropped and took XRP with it. Stop loss triggered for ~1% loss. I'll reenter when it hits the reentry zone or break back above the daily 50MA / diamond bottom support.
BTC dropped and took XRP with it. Stop loss triggered for ~1% loss. I'll reenter when it hits the reentry zone or break back above the daily 50MA / diamond bottom support.
Comment:
Someone PM-ed me a good question and I'll answer it here for everyone to see: did the pattern fail? The answer is no. When the price moves below the diamond bottom resistance line (the line I put the green diagonal reentry zone on) then the pattern fails. I put a very tight stop loss on it because if BTC drops like a rock typically so does everything else and I want my capital back for a lower reentry. If XRP flirts above and below the 50MA / diamond bottom support line I'm fine with taking a 1% hit several times because the reward:risk ratio is very healthy with this trade. Even if my stop loss triggers 4 or 5 times that's still a 3:1 to 7:1 reward:risk ratio if price hits the target.
XRP/BTC is in a falling wedge formation (green) which suggests a reversal is imminent. However there’s a max of ~13% this pairing can decline before the pattern fails. Target to the top of the wedge is ~15% which falls right in line with the bottom of the XRP/USDT diamond bottom target zone (assuming BTC price stays the same). If XRP/BTC breaks out of the wedge and hits the orange trend line that’s a ~38% ROI which also falls in line with the top of the diamond bottom target zone (assuming BTC price stays the same). I don’t chart many ALT/BTC pairings because I’ve seen them break the rules too much but when the numbers line up so well with the USDT chart then I tend to give it more credibility.
In keeping with the falling wedge formation I expect XRP to do any of the following:
BTC goes up 13%, XRP/BTC drops 13% and the XRP/USDT price stays flat.
BTC goes down, XRP/BTC drops 13% and the XRP/USDT price plummets (why I use a tight stop loss).
BTC stays the same and XRP/USDT increases 15% - 38%.
BTC goes up and XRP/USDT increases whatever BTC increases + 15% to 38%.