XRP is flashing pink this Tuesday morning with a long-term worth indicator turning bearish for the primary time in over a yr.
At press time, the third-largest cryptocurrency by market capitalization is at the moment buying and selling at $0.2955 on Bitfinex, representing a 1 p.c drop on a 24-hour foundation. Extra importantly, nonetheless, the 50-day shifting common (MA) of XRP’s worth has crossed under the 200-day MA.
That’s the first “demise cross” or a long-term bearish crossover since April 2018.
Technical evaluation idea considers the demise cross as an advance warning of a significant sell-off. In actuality, nonetheless, the crossover is the results of a significant worth slide – the MA research are based mostly on historic information and have a tendency to lag worth.
That is evident from the truth that XRP fell from $0.52 to $0.28 in 3.5-weeks to July 16 and the bearish crossover has occurred immediately.
Put merely, the long-term MA crossovers are lagging indicators and have restricted predictive powers at finest.
In actual fact, the demise cross has labored as a opposite indicator prior to now, as seen within the chart under.
Every day chart
XRP fell from a report excessive of $3.30 to $0.45 in three months to April 1, 2018, and the 50- and 200-day MAs produced charted the demise cross on April 9 following which XRP picked up a bid and rose to a excessive of $0.96 by April 24.
Be aware of the truth that the 14-day relative power index (RSI) was reporting oversold circumstances with a below-30 print on April 1. An oversold RSI signifies the sell-off is overdone and potential for a corrective bounce, which occurred after the affirmation of the demise cross.
This time, the RSI is hovering at 37.00 (above proper). A studying between 50 and 30 signifies bearish circumstances.
Additional, the pennant breakdown, a bearish continuation sample, confirmed earlier this month signifies the trail of least resistance is to the draw back.
Subsequently, the most recent demise cross may find yourself bolstering the already bearish setup.
XRP may drop under the assist at $0.2825 (April 25 low) within the short-run and lengthen losses towards the September 2018 low of $0.25.
The short-term outlook would flip bullish if costs rise above $0.34097 (July 20 excessive), invalidating the bearish decrease highs setup.
Disclosure: The writer holds no cryptocurrency belongings on the time of writing.