Source: PaxForex Premium Analytics Portal, Fundamental Insight
With the cryptocurrency bullishness of last week gone, the sector joined global financial markets in their match towards a potentially prolonged correction. The latest developments surrounding the Ripple legal battle with the SEC are one area of interest. The SEC claims its warned Ripple executives before the launch of their token sale that the regulator would classify it as a security sale, known as fair notice. District Judge Analisa Torres ruled that Ripple has to make public sealed internal legal memos from 2012 public, which could determine the outcome of this unprecedented legal fight and shape US cryptocurrency regulation moving forward.
Despite the uncertainties, Ripple whales remain confident over the future of the XRP/USD token. Since December 2021, they have added 897 million tokens worth over $712 million. It represents the second-largest accumulation to date, trailing the November to December 2020 accumulation of $1.29 billion. It coincided with a widening of the XRP/BTC spread. While the technical picture favors a short-term extension of bearish pressures, the medium-to-long-term outlook remains bullish. Even a loss in court is unlikely to derail the long-term prospects of the XRP/USD token, which established itself as the primary bridge between the cryptocurrency market and legacy banking institutions.
Cryptocurrency traders must remain cautious despite the rising number of attractive buying opportunities. Futures markets show a lack of conviction, as the global financial system remains under stress from central bank monetary policy changes, inflation, supply chain bottlenecks, debt, and geopolitical issues. Perpetual contracts, or inverse swap rates for leveraged overnight positions, for many cryptocurrencies remains negative. It suggests that bears ask for more leverage than bulls, but Ripple prints a moderately positive number, adding to a slowly expanding bullish case.
The forecast for the XRP/USD slowly turns bullish following the most recent sell-off after the horizontal resistance area rejected price action. Ripple plunged 27%+, but the Ichimoku Kinko Hyo Cloud stabilized and now shows a bullish bias. Confirming the lack of short-term bearishness is the Kijun-sen, which flatlined, but the Tenkan-sen points lower and potentially to a volatility increase. Traders should monitor the CCI on its way to reaching extreme oversold territory. A temporary dip below -100 followed by a breakout will offer a final buying signal. Can bulls overcome bears and force the XRP/USD into its horizontal resistance area once more? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the XRP/USD remain inside the or breakout above the 0.6355 to 0.7310 zone, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6890
- Take Profit Zone: 0.9310 – 1.0145
- Stop Loss Level: 0.5840
Should price action for the XRP/USD breakdown below 0.6890, PaxForex recommends the following trade set-up:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.5840
- Take Profit Zone: 0.4620 – 0.5000
- Stop Loss Level: 0.6890
Open your PaxForex Trading Account now and add this currency pair to your forex portfolio.
