Here, we are looking at a technical analysis of Ripple (XRP) with a nine-day window – May 30 to June 6, 2018. In this analysis, we apply indicators such as Bollinger Bands, the famous Moving Average Convergence-Divergence (MACD) oscillator and the Relative Strength Index (RSI). If the supports stands at 0.58, the first buy notion indicated by the blue arrow is characterized as being oversold while having a fairly large spread in the MACD of -0.0036. At this point, RSI had fallen almost below 30. RSI, MACD and the Bollinger Bands buy signals lined up fairly well.

The sell signal, indicated by the red arrow, was given in part because the price of XRP started to push the limits of the Bollinger Bands. After it was clear that XRP was flat, the Bollinger Bands suggested that the coin was beginning to be overbought.  Spread in the MACD reached a positive 0.0025, signalling that the price what about to change course again.

Furthermore, we can see that the RSI at the first sell point spiked above 80. What goes up from here can only come down. RSI took a dive, and the MACD had officially reached its intersection, signalling a sell. Despite this, the price remained flat for another 24 hours. All in all, I think it was a safe enter-exit strategy.

This strategy directly reflects where the next two signals were placed.

Let me conclude by saying that while conducting a technical analysis on cryptocurrency you may want to be wary of the indicators and make sure they are derived from relevant calculations.

For example, I continue to read one online analysis after the next and find that many like to include On Balance Volume (OBV) while covering cryptocurrency. OBV exists to predict price fluctuations partially based on the assumption that institutional capital [smart money] flows into a security, increasing demand for the stock; thus, increasing the price. The problem with OBV lies in the fact that institutional capital is not technically present, and may not be an accurate predictor of future prices.

Hitesh Malviya

Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.