Ripple (XRP) Appears Very Vulnerable Short Term, Significant Downside Likely

While most cryptocurrencies are throwing mixed signals as to their probable course of action in the weeks ahead, Ripple (XRP) seems to have made a clear decision. The weekly chart for XRP/USD shows that the price has now run into the 61.8% Fib level and bounced strongly off it. Ripple (XRP) has now effectively fallen back in to the descending channel having also fallen below the 21 Week EMA. If the overall market outlook was different, there would be little doubt as to the near term direction of Ripple (XRP). The RSI/Stochastic crossover also points to a bearish outlook in the weeks ahead. As long as the price stays below the 21 Week EMA, there is little to no hope of a bullish reversal for Ripple (XRP). That being said, Ripple (XRP) is currently at a point where one strong move could turn the tables in no time.
As the weekly chart for XRP/USD shows, Ripple (XRP) has declined in a series of downtrends with decreasing momentum. As the price fell from its all-time high to February lows, we saw a very aggressive downtrend. However, the series of downtrends that followed it were less aggressive in nature than the preceding ones. Furthermore, the resistance neck line of the previous downtrend became a support for the next one. This is why Ripple (XRP) was able to break out successfully in October after finding support atop the previous resistance. This pattern of downtrends will continue until the price is able to break out of the descending channel. So far, it appears that Ripple (XRP) does not have the strength to break out of this channel just yet and will have to decline further before it can attempt a successful breakout.

The number of shorts for Ripple (XRP) declined aggressively last week. This might appear to be a good development for Ripple (XRP) as decreasing sell pressure allows the price to rally with little resistance. However, this strong decline in the number of shorts has yet to reflect in XRP/USD. If the number of shorts keeps declining in this manner, we will see a lot of bears lose interest in Ripple (XRP). However, they will return just when Ripple (XRP) is about to rally because XRPUSDShorts will by then be heavily oversold and ready for a correction to the upside.

Ripple (XRP) has not been a big fan of following in Bitcoin (BTC)’s footsteps unlike the majority of cryptocurrencies. This pattern has become even more frequent now that Ripple (XRP) is in direct competition with Bitcoin (BTC) as the second largest coin by market cap. Just as we have seen Ripple (XRP) rally when the rest of the market was bleeding red, we can also expect Ripple (XRP) to bleed as the rest of the market recovers. We have seen in the past that no matter how far, how fast a cryptocurrency goes against the direction of the rest of the market, sooner or later it has to correct.