Similar to the XLM-BTC analysis from a couple of weeks ago, XRP-USD markets have found themselves grinding up against long-held macro support. Support that, if broken, will undoubtedly lead to a sustained, strong move to the downside:
Figure 1: XRP-USD, Weekly Candles, Underlying Support Levels
Amid the chaos of the bear market, sometimes it’s hard to see the 30,000-foot view of things. Since bottoming in September, there was very strong respect for the current established support level. The support occurred at a very logical spot, too: right on top of the previous trading range established throughout 2017. After breaking north of the 2017 trading range, we can see a very clear and strong round of buying that propelled the market into astronomical levels in a very short period of time. Now, two years later, we find ourselves testing the upper boundary of the previous trading range.
So far, we have seen three solid tests of the support level (the current price action being the third test), and each test has had weakening demand rallying from the bottom:
Figure 2: XRP-USD, Weekly Candles, Three Tests of Underlying Support Level
The response to the support level has weakened in both spread and volume with each consecutive test of support. And now, on our third test, we see a slow bleed down into support. Although we haven’t closed a new low on the weekly candles, it seems like things are heading in that direction. We see that sustained selling pressure on the ride down toward support and any bullish effort results in equal or greater bearish pressure — definitely not something you want to see if you are an XRP bull.
At the moment, the market is respecting the support level, but if we manage to close a new low, things are going to get interesting, very quickly:
Figure 3: XRP-USD, Weekly Candles, Prior Weekly Lows
We have been flirting with the lower boundaries of the previous low, but we still have several days until this weekly candle closes. If we manage to close below the previous close, that will likely cause supply to surface as this represents a break of the local support levels on lower time frames. And, unfortunately for the bulls, a weekly candle close below the $0.27 region would show macro weakness in the overall market. Since the beginning of the crypto bear market, XRP-USD has been consolidating sideways and has held its only major support level. A close below this support level will likely yield a retest of lower support in the $0.14 region. For now, support is being respected and bulls should be keeping a close eye on how the weekly candle closes. A strong close to a new low is generally a bad sign that supply is still present and the market is still searching for new support.