Ripple broke out of the consolidation pattern illustrated in the previous article, and the upside break signals that bulls are in control. The breakout was so strong that it also led to a move past the longer-term descending trend line connecting the highs since mid-May.
Price has formed three long green candles on the 4-hour chart, also indicating that bullish pressure is strong. However, a doji can be seen to reflect hesitation among buyers and sellers for the time being. This could lead to a pullback to the broken trend line or triangle resistance before the climb resumes.
Stochastic is already indicating overbought conditions, which basically means that buyers are somewhat exhausted. The oscillator has yet to turn lower to reflect a pickup in selling momentum. RSI is also in the overbought zone to show rally exhaustion, possibly leading to profit-taking once it turns lower.
Support areas are located around 0.2500 and 0.2200, with a break below these levels likely to signal that sellers are gaining the upper hand once more. Resistance is located around 0.3200 then at the 0.3500 major psychological mark.
Volatility for cryptocurrencies has picked up again after one of the top exchanges in China resumed withdrawals for clients. Recall that this has been one of the biggest drags on Ripple and other digital currencies as monetary authorities stepped up their efforts to crack down on money laundering operations in the country earlier this year. This severely dampened volumes and the outlook for cryptocurrencies since China is one of its largest markets.
Now that authorities no longer seem to be as adamant as restricting cryptocurrency activity, Ripple and other digital currencies could be poised for another leg higher. Back when Japan announced that it is officially recognizing bitcoin as a legal form of payment earlier this year, most cryptocurrencies were able to enjoy a pickup in volumes.
Ripple could continue to gain traction moving forward as it has partnered with some of the largest financial institutions and banks including BBVA and the Japan Bank Consortium. It looks like its more transparent infrastructure could draw more interest from here.
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