XRP is teasing a long-term bullish reversal, with a surge in price and a bullish chart pattern likely to occur next week.
The world’s third largest cryptocurrency by market capitalization is currently trading at $0.413 on Bitfinex, representing a 27 percent gain on the opening price of $0.3249 seen May 1.
If prices stay above the current level till May 31, the resulting monthly gain would be the biggest since September 2018. Back then, the cryptocurrency had rallied 73 percent from $0.3350 to $0.5820.
The rally seen this month appears modest in front of the stellar gains registered in September 2018. The cryptocurrency, however, may produce much bigger gains in the following months as a widely tracked long-term technical indicator is about to turn bullish.
The upward sloping 50-day moving average (MA), currently at $0.3434, looks set to cross above the 200-day MA, currently at $0.3470, in the next few days.
That would confirm a “golden crossover” – a pattern which indicates long-term bullish reversal, according to technical analysis theory. Many experts, however, call it a lagging indicator, as the MA studies are based on historical data.
An impending golden crossover, therefore, could be considered a product of XRP’s rise from the April 25 low of $0.2825 to the recent high of $0.4787 rather than a hint of further gains.
That said, XRP is still down 87 percent from the record of $3.30 reached on Jan. 4, 2018 and far from being overbought. The golden crossover, therefore, may invite chart-driven buying, leading to the next leg higher in the cryptocurrency.
As seen above, the 50-day MA is fast closing on the 200-day MA.
The crossover confirmation could be followed by a convincing break above the recent high of $0.4787 as the 14-day relative strength index (RSI) is currently biased bullish at 61.00 and well short of the overbought territory (above-70).
Further, the Chaikin money flow index (CMF) is printing positive, indicating strong buying pressure.
XRP jumped 34 percent in seven days to May 19, validating seller exhaustion seen near $0.28 in the first 4.5-months.
So far, however, the follow-through to that bearish-to-bullish trend change has not been bullish. In fact, the cryptocurrency formed a hanging man candle last week – a bearish development.
The outlook, however, would again turn from bullish-to-bearish only if the price ends below $0.3593 at this Sunday’s close (UTC).
Disclosure: The author holds no cryptocurrency assets at the time of writing.
XRP image via Shutterstock; Charts by Trading View
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