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Whipsaw Above Trendline Resistance for XRP/USD?

By:
Aaron Hill
Published: Feb 19, 2024, 19:18 UTC

XRP/USD is trading at trendline resistance, though is vulnerable to being whipsawed, according to the technical picture!

Ripple coins, FX Empire

In this article:

With the recent upside in most major crypto pairings, it seems only fitting to look over Ripple’s technical price action against the US dollar (XRP/USD).

Following a pullback from lows of $0.4856 in early February (off support at $0.4946), buyers and sellers have been squaring off at the underside of trendline resistance (extended from the high of $0.7488) since 15 February. While this trendline has attracted selling, it has not been anything to write home about.

Key Resistance Above Trendline Resistance

Consequently, in conjunction with knowledge that the pairing has been in a downtrend since late 2023, and a resistance zone at $0.5999-$0.5846 resides just above the trendline resistance (also houses a Fibonacci cluster around $0.5903), a whipsaw (some may also refer to this as a stop run) through the trendline resistance is a potential scenario to be aware of.

Most traders will know that the bearish response from the trendline resistance on 15 February has prompted traders to locate protective stop-loss orders (buy stops) north of the trendline resistance. How far north is difficult to estimate, yet given we are working with the daily timeframe, a stop area would likely sit within the limits of the resistance zone mentioned above at $0.5999-$0.5846.

Stop Run?

So, the idea here is that although a reaction has been seen at the trendline resistance, sellers failed to hold price beyond $0.5400. As such, as exhibited on the chart, a whipsaw through trendline resistance into the walls of the resistance area could come together and may deliver sufficient technical juice to encourage selling into the buy-stop liquidity above the trendline resistance.

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The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.

About the Author

Aaron Hillcontributor

Aaron graduated from the Open University and pursued a career in teaching, though soon discovered a passion for trading, personal finance and writing.

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