Analyst gives 3 reasons why the XRP price can drop by 35%

The Ripple blockchain’s native token XRP has grown more than 25 percent by 2020 so far. Even so, the fourth largest cryptocurrency is still trying to reduce those gains, according to a series of bearish indicators put forward by a TradingView.com analyst.

The US chartist pitted XRP / USD against three technical bearish setups. These included a long-term moving average wave, a bearish divergence between price and momentum, and a death cross. Taken together, all three point to a longer dip towards $ 0.15, a classic support level 35 percent below current price.

The ripple chart shows XRP / USD in a big downtrend move. Source: TradingView.com Ripple chart shows XRP / USD in a big downtrend move. Source: TradingView.com

Price-momentum conflict

First, the TradingView analyst highlighted a trail of lower highs and higher lows that XRP / USD has left behind since 2018. The pair recently broke the downside channel (in blue) but a strong upside rejection near the 200 week moving average curve threatened to push it back into the area.

“You can see the price fell below 200-WMA (in purple) for the first time in the summer of 2019,” the analyst explained. “XRP has consistently failed to recover above the 200 WMA. It was rejected there in the last three major attempts. “

It combined the XRP downtrend – particularly the recent bearish wave – with its otherwise improving Relative Strength Index (RSI). The indicator reflects the strength or weakness of an asset based on the closing prices of a last trading period. The weekly RSI on the XRP rose – a sign of higher buying momentum – even though the spot price trended lower.

“That is a bearish Divergence that could lead to weakness in the coming weeks, ”said the analyst. “Although there is already a breakdown in divergence on the RSI. “

XRP death cross

XRP was also traded down under the influence of a “Death Cross”. It is a bearish indicator that becomes visible after an asset’s long-term moving average closes above its short-term moving average. In the case of XRP, the weekly 200 WMA (purple) jumped above its 50 WMA (blue) as early as January 2020, resulting in what is known as a bearish crossover.

XRP, Ripple, Cryptocurrency, BitcoinXRP / USD’s 200 WMA jumped above its 50 WMA. Source: TradingView.com XRP / USD’s 200 WMA jumped above its 50 WMA. Source: TradingView.com

“It’s a sign of persistent weakness,” noted the analyst.

Aside from these three reasons, the lower trading volume and volatility also left XRP’s recent bullish move at a dubious stage. The token has attracted fewer traders in the past two years. That may have to do with an ongoing class action lawsuit against its parent company Ripple Labs as to whether or not XRP is safe.

The San Francisco-based blockchain startup reported its lowest quarterly revenue in the first quarter of 2020, selling XRP worth just $ 1.75 million.

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