Embracing the Correction in (XRP) Ripple Coin Prices

Ripple
credits:istock.com/allanswart

XRP Coin Prices: Corrections Are a Healthy Part of a Bullish Trend

Cryptocurrencies continue to garner a lot of attention, and even the slightest mention of the work “blockchain” piques investor interest. There are a lot of opinions with regards to this new asset class, and I can honestly say that I am skeptical regarding the longevity of this asset class. But that does not mean that I do not believe that further gains are to be made before everything is said and done.

Ripple coin (XRP) prices have been getting a lot of attention over the past few weeks and for good reason. The XRP coin price has appreciated by an astronomical 1,400% since December 10. What makes this feat that much more extraordinary is that it was accomplished while Bitcoin prices have been correcting. Corrections are a natural part of a healthy trend, and they should be welcomed rather than feared.

XRP Price Correction

After XRP ran up by 1,400% I have the inclination to believe that one of these corrections is now gripping Ripple coin prices. My beliefs are centered around the indication highlighted on the following XRP price chart.

Ripple Chart

Chart courtesy of TradingView.com

The focus of the Ripple price chart is the moving average convergence/divergence (MACD) indicator located in the lower panel.

MACD is a momentum initiator that uses the crossing of a signal line in order to determine whether bullish or bearish momentum is influencing the trading action in a cryptocurrency. This is very pertinent information because, without the applicable momentum, a sustained move in either direction cannot occur.

On January 9, a bearish MACD cross was generated, which is currently suggesting that bearish momentum is influencing the price action in XRP coin prices. This means that lower Ripple prices are likely to prevail in the interim. This bearish MACD signal is why I believe Ripple coin prices are likely to correct.

I view this correction as a temporary pause within a much larger bullish trend. Corrections are a necessary phenomenon needed to restore the health of a trend, so higher prices can prevail at a later date.

I am using the MACD indicator in order to suggest that correction is now taking hold, and I will be using the same indication in order to suggest that a correction has run its course. A bullish MACD cross, when it occurs, would suggest that the correction has run its course and the predominant bullish trend can once again reassert itself.

Gauging the magnitude of this correction can be accomplished using Fibonacci retracement numbers, and the following Ripple coin price chart has been annotated using this tool.

Ripple Price Chart

Chart courtesy of TradingView.com

This XRP price chart has been annotated using Fibonacci retracement numbers.

Fibonacci retracement numbers are a very popular technical tool used to identify counter-trend price objectives. In theory, when an asset’s price stages a correction within a bullish trend, the price will correct approximately 50%-62% of the move that preceded it, before the bullish trend reasserts itself.

Applying this tool, I would not be surprised to see XRP prices pull back to approximately $1.40, which is the 62% retracement level, before the predominately bullish trend reasserts itself. At the same time, I cannot, and would not rule out a test of $0.80.

The Predominant Bullish Trend

The following Ripple coin price chart illustrates the predominantly bullish trend, which is still in development.

xrp Price Chart

Chart courtesy of TradingView.com

This XRP price chart illustrates that the bullish trend that began early last year has been constructive in nature.

Constructive price action consists of an alternating wave structure made up of impulse waves and consolidation waves.

The impulse waves, which are highlighted in green, capture the stage in a bullish trend where the cryptocurrency makes a sustained move toward higher prices.

The consolidation waves, which are highlighted in purple, capture the stage in a bullish trend when the cryptocurrency corrects. Corrective price action is a necessary step to alleviate overbought conditions that were created in the impulse waves that preceded it. This creates the necessary conditions so a new advancing impulse wave can follow.

Impulse waves and consolidation waves work together in order to create the necessary foundation to sustain a bullish trend.

The completion of the consolidation wave coincided with a bullish MACD cross. These coinciding indications correctly suggested that an impulse wave was likely to develop, and higher Ripple prices have followed as a result.

XRP Coin Price Forecast

I published a report on December 15, titled “Ripple Prices Are All Set to Make a Parabolic Move Towards $9.00.” In that report, as the title suggests, I outlined why I believed that higher prices were on the horizon, and why I believed that $9.00 was a viable price objective.

This target was obtained using the alternating wave structure, and it is based on the notion that impulse waves separated by a consolidation wave tend to mirror each other in terms of length. The majority of the time, I use a linear scale to mirror the impulse waves, but since cryptocurrencies have a tendency to make parabolic price moves, I used the log-based length of the impulse wave to create the $9.00 price objective.

At the time I wrote that report, many thought I was being a little too optimistic with my price objective, but after the stellar run over the past few weeks, my objective does not seem so far off.

I still believe that $9.00 is a viable price objective and once this current correction has run its course, XRP prices will once again resume their trend toward that price objective.

Analyst Take

I have reason to believe that Ripple coin prices are in the grips of a price correction, which is a healthy development following the 1,400% run that was experienced over the past few weeks. Once this correction runs its course, I will be looking for XRP coin prices to resume their predominant trend toward higher prices.