Crypto assets became popular relatively quickly, especially when their prices soared in the past few years, and they showed enormous potential. Yet, recently prices of cryptocurrencies have fallen dramatically. Bitcoin is now trading below 36000 USD per unit at the time of writing, nearly half of its top value. Ripple (XRP) may seem to be promising, given its function as a digital currency that helps in conducting international transfers, but that is not necessarily true. In fact, XRP’s price is moving in correlation with other crypto assets.
If you are interested in Ripple’s potential despite the challenging market conditions, here are a few tips for trading it in the current trading climate.
Tips for trading Ripple like a professional
Some of the following tips are based on fundamental analysis whereas others are based on technical analysis. When trading XRP, it is better to use both for the best outcome. You can use crypto exchanges like Kraken or Binance to trade XRP or contract for different brokers like easyMarkets that allow trading of XRP against the US dollar.
1. Monitor the movement of the US Dollar. The XRP is priced in US Dollars, and thus Dollar movements have an impact on where the XRP goes. If the US Dollar grows stronger, then the XRP will likely face some weakness. If the US Dollar weakens, then the XRP is likely to appreciate at price. The extent of the impact varies from time to time, but it is there. And while it is important to pay attention to this relationship, it is also noteworthy that cryptocurrencies are not necessarily a hedge against inflation.
You can monitor the movement of the US Dollar by looking at the US Dollar index, which measures the strength of the American currency against a basket of other currencies.
2. Monitor how the Ripple company is performing. The Ripple organization was founded to help individuals and companies with cross-border payments. Some say that it promises to replace the SWIFT system. Those promises are somewhat exaggerated, however, based on the recent performance of the XRP. Despite this, if the Ripple organization somewhat manages to make breakthroughs, then this can give a boost to XRP.
3. Monitor key support and resistance levels. Identifying key support and resistance levels can help you finetune your entries and exits when trading. This applies to XRP like any other instrument. You can draw those levels by connecting three consecutive highs or lows that fall on the same line. Recently, XRP seems to have broken a trendline to the downside. This is a strong bearish signal.
4. Monitor the news about regulating cryptocurrencies. Regulators are working hard to rein in cryptocurrencies. Such efforts will impact both supply and demand for those assets, XRP included. Be sure to follow the news and stay up to date. Otherwise, you will be caught off guard by unexpected market movements.
Summary
There are many ways to read the XRP chart and analyze where the instrument is going. Relying on fundamental and technical signals gives you a good prediction with a higher likelihood of success. Right now, most signals say that XRP has a more bearish tone. Nevertheless, even if you have a strong prediction and you are confident, you should always use a stop loss and keep an eye on the risk to protect your account.
