The cryptocurrency market lost its mojo recently. Ever since the coronavirus pandemic, a new generation of young traders joined financial markets, not the crypto universe. Ripple price, just like Bitcoin or another major cryptocurrency, consolidates for months now, with many wondering what is going on?
After all, investors used to the high-volatility crypto market ended up watching nothing but ongoing consolidation. Attention shifted to the stock market, where fractional investing dragged interest from all investors.
Yet, the crypto market may not move, but it is coiling. The ripple price, at least, forms a falling wedge on the daily timeframe – a bullish reversal pattern, with powerful implications for the medium to long-term horizon.
Before discussing the technical aspect for Ripple price, we should mention its direct correlation with Bitcoin price. As Bitcoin builds energy to break above the 10,000 level, so does Ripple price – it builds energy to break the upper edge of a bullish reversal pattern.
Ripple Price Technical Outlook
A huge falling wedge forms on the daily timeframe, with major upside potential. However, before going long, investors should wait for the price to break higher. Otherwise, the risk is that the market will keep on pushing new lower lows and lower highs, a typical condition in bearish markets.
As a bullish pattern, a falling wedge forms at the bottom of bearish trends. The price only makes marginal lower lows, with little or no follow-through. Because the wedge forms on a bigger timeframe, the consolidation seems endless, especially towards the end of it.
It is not unusual for the price to pierce the lower edge of the pattern with its last segment. Because of that, waiting for the upper edge to break is mandatory, before dedicating some capital to the trade.
Here is a trading plan. First, wait for the price to break the upper edge of the reversal pattern – it currently builds energy to do so. However, it did not yet, so caution is needed. Second, wait for 0.25 before going long with a stop-loss at the most recent lower lows. Finally, stay in the trade for a minimum 1:2 risk-reward ratio.
As a side note, the price following a wedge formation often fully retraces the entire pattern. If that is the case, Ripple price has more potential than just the 1:2 rr ratio given by this trade idea.