2017 Ended in Accolade, 2018 Began in Correction
Ripple ended 2017 with a blast. In 2017, 3 identifiable reasons helped Ripple’s (XRP) price surge, impacting Bitcoin’s dominance, surpassing Ethereum’s market capitalization, and making it the best performing cryptocurrency of the year. However, 2018 hasn’t been as benevolent a year to the crypto asset – yet. The past few days have seen XRP’s market cap drop by 20 billion on coinmarketcap, specifically on account of the website’s exclusion of South Korean exchanges from its price calculations. Consequently, Ripple (XRP) is down from highs of $3.84 recorded on January 4th 2018, to $2.01 (as on January 10th, 18:06 UTC); a dive of about 50% in just six days.
Ripple now seems to be in its correction mode, meaning that bargain hunters are eyeing the next entry point.
Fibonacci Applied to Ripple (XRP) Price
We conducted Fibonacci analysis on the price of Ripple (XRP) over the past few months, to identify exit points for investors. The Fibonacci analysis is applied when there is a noticeable up-move or down-move in the prices of a security. When a security moves either upwards or downwards sharply, it usually tends to retrace to certain levels before its next move, giving the investor certain identifiable entry points. Fibonacci analysis helps identify these retracement levels, which provide a good opportunity to enter new positions in the direction of the trend.
The Max Pullback Zone: Identified
Now, the most significant Fibonacci retracement level to watch for is 0.618 (equivalent to 61.8% of the Fibonacci up-move). This level tends to be the maximum pullback zone before the security resumes its uptrend. We identified the peak and trough of the recent price rally for Ripple; the peak is at $3.30 and the trough at $0.20. Hence, the retracement levels (23.6%, 38.2%, and 61.8%), as also identified in the chart above, come out as being $2.57, $2.12, and $1.38.
When Can You Enter?
So, after minor retracements in the downtrend at around $2.57 and $2.12, we expect a final retracement leading to the onset of a reversal in trend (from downtrend to uptrend) at $1.38, which coincides with 61.8% Fibonacci level.
All of the Fibonacci retracement levels serve as probable entry points, as one expects to see a slight retracement (upward move, in this case) each time the level is reached. However, for bargain hunters looking out for the max drawdown level to enter XRP before the trend reverses to an uptrend from a slide, the $1.38 level remains critical.
Disclaimer: The opinion expressed above is based on Fibonacci analysis conducted on Ripple’s (XRP) recent price surge. But, given that unpredictability and volatility is at its highest with this asset class (cryptocurrency), the price points calculated above remain mere estimates of future performance. One cannot guarantee that the cryptocurrency market will follow Fibonacci!