Ripple XRP – SWELL not so Swell and Rather Cool – Technical and Fundamental Analysis
With the first Swell conference taking place October 16 to October 18, alongside the Swift conference, the general public had great expectations, specifically day and swing traders, only to be hugely disappointed, reflected by a massive correction.
The point of any conference is to build awareness, raise issues of concern, protect investors, and ensure continuity to efficiently grow the industry. Leading up to the days of the conference, we could sense the market hype reflected in the charts, reaching astounding volume and new 7-week highs at $0.30.
We must consider what happened from the perspective of all traders and investors. As a day-trader, one would most definitely enter into the strength of this uptrend and hype leading up to the first day of the conference, as I most certainly did. We first notice a small correction of 0.328, implying strength on the next wave. The leading motive waves led to a rally, reaching precisely $0.30, and no more. Taking Fibonacci extensions from the marked ABC points, we observe a common target of 1.618 extension was achieved. This happened at 8 A.M., which implies the rally was hype based prior to event beginning, let alone prior to the first speaker and even panel.
What happened next has baffled short-term trader. We must first understand that within 3 days and 9 hours, XRP reached almost record breaking volume and rallies of 29.09%. As any strong uptrend, a correction is always overdue. We think of stocks as running fast and eventually requiring rest to progress further. Therefore, emotions should be substituted with reasoning and understanding of market conditions.
The market sentiment is with large expectations of overwhelmingly positive news. We can assume positive news based on the confidence of Ripple’s CEO, Brad Garlinghouse, for organizing such an event alongside SWIFT, who is direct competition with Ripple. Not only is SWIFT direct competition, but SWELL was intentionally scheduled alongside SWIFT in the same city, Toronto, at the same time, with intentions of disrupting their conference, by confidently challenging SWIFT’s monopoly in the financial sector. This is a move one must consider bold.
As profits were taken at exactly 8:30 AM CST, we retraced to a respectable support area, bouncing off both the 0.618 and 0.5 Fibonacci areas, eventually finding brief support at the 0.382 level. Now make note of the time, which was 12:15 PM CST, during the Ben Bernanke keynote speech.
It is exactly during this speech that the market decided Ripple is unfortunately not curing cancer or take over the financial industry. We must understand that massive news was expected, and unfortunately Ripple did not deliver. Was this enough to warrant strong further declines? When we consider the point of a conference, it is to deliver positive news and to generate investor interest, while raising fundamental awareness of key struggles, based on success stories from a panel. What SWELL did was in line with the expectations of a conference at this level.
What we did not expect was to have Ben Bernanke and all panels to forewarn traders and investors at all levels of the potential dangers of incorporating blockchain technology into the modern day financial industry.
“Investing in blockchain has it’s dangers and one must be cautious,” were implications that went against the hyped-up market sentiment of this conference, reflected heavily in the further decline.
It is at exactly this time at 1PM CST, that the market decided and concluded the conference didn’t live up to their expectations combined with a negative connotation towards blockchain technology and general cryptocurrencies.
A massive panic sell ensued, resulting in an almost record breaking decline for Ripple, retracing to 0.786 region, relative to the prior hype-based uptrend.
Here, we stalled for a night at this level, with a fundamental market consolidation where bearish sentiments were concluded. This panic carried over to when the second day conference began.
“Once burned, twice shy.”
“Brad must have an ACE up his sleeves to challenge the SWIFT conference.”
We can see throughout the day how there was indeed hope, but vanished into thin air.
Without revealing overwhelmingly positive news once again, the market sentiment further bearished, losing faith in XRP, consequently resulting in where we are currently at in the market. There is no doubt in my mind that the 17.33% drop in 23 hours, leading up to Day 3’s conference, was due to high expectations with large disappointments.
We can see throughout the conference how technical analysis and fundamental analysis were aligned amongst one another.
The time is now 8 AM, day 3 of the conference, where private meetings are behind held. We have retraced further with massive declines based on the disappointment of day 1, expectations of day 2, and with the “once burned, twice shy,” sentiment, the market has concluded that there will be no “Ripple cured cancer,” announcement.
Now where are we currently at? On the daily chart, we are currently testing the 0.5 fib retracement level at $0.23, relative to a 6-month low in July. Will this support hold? For now, perhaps, though we must acknowledge the presence of the next major support level based on a underlying trend-line found at the 0.618 Fib level, at $0.194.
The daily chart MACD has crossed over, with a bearish RSI decline at 46. A bullish market’s RSI is considered between 40 and 80, and a bearish market’s RSI is considered between 30 and 60. We have now entered neutral territory that will decide the next trend based on today’s news. Only time will tell and by the end of the day, a conclusion with strong support levels will be established.
For day traders, there are plenty of opportunities to enter positions during heavy volatility. For investors, if support levels are found, there are great buying opportunities to hold long term.
We must acknowledge the fact that XRP has great potential, and this is the first stepping stone to dismantling a monopoly that SWIFT currently has. Oligopolies will exist, and there is no doubt in my mind that Ripple is here to stay. Ripple has the potential to disrupt the financial sector with it’s ground-breaking technology and reliability.
I wish all traders and investors luck.
May the profits be forever in your favor.
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I am a full-time day-trader with a background in mechanical engineering technology and mathematics.