XRPUSD - On to $0,27

5 may 2020

Hello again,

I am considering a very interesting scenario on XRPUSD for the foreseeable future.

Earlier today I wrote a post that explained that I believe we are now a triangle that acts as the fourth wave of an impulse wave up (you can find the link to that in Related Ideas).

In the chart, you can see that we started the A-wave of this zig-zag at $0,11. From there, we went up in a leading diagonal which ended at $0,205 on the 6th of April. Thus endeth wave A.

From there, a double zig-zag formed, retracing back to $0,174, which was the end of the B-wave. Not an amazingly strong retracement, but a valid one nonetheless at a little over 30% of wave A.

Then, we start an impulse wave. Now, if this was a third wave, I would be surprised; it has been a very modest impulse wave so far, and volume has not increased much at all as we would expect in third wave. Nor are we seeing the power and thrust we associate with third waves. This would suggest that this is not, in fact, a third wave, but the C-wave of a zig-zag; the leading diagonal and the present impulse wave are of an equal level to each other, and not in relation of 1st and 3rd wave.

After some consideration, I have come to the conclusion that we appear to be forming a large zig-zag upwards; a corrective move.

Now, there are a few reasons I think $0,27 to be a valid target. Allow me to explain and illustrate:

• Neither of the 1st and 3rd wave of this particular impulse are extended. If they were, they would show a much clearer wave in either of them. The EW guidelines tell us that in that case, we can expect an extended 5th wave.
  
  
• In the case of an extended 5th wave, there is often a relationship between the length of that wave and the distance travelled in waves 1 and 3. If we extend that distance from the expected end of the 4th wave, we get the following image:
  
  
  
  As you can see, a 100% extension of that same distance travelled by waves 1 and 3 would put us at $0,267.
  
  
• In the case of a zig-zag, the A and C waves are often equal in length. Considering again our leading diagonal as the A-wave, and extending that from the end of the B-wave at $0,174, we get the following:
  
  
  
  As you can see, such a measured move would end at the level of $0,268.
  
  
• The level of $0,27 would fall nicely in the range of a 61,8% - 76,8% retracement of the previous wave down; not an uncommon area for a zig-zag:
  
  
• The target of a C-wave is often on a line from the end of point A drawn parallel to a line starting from the start of wave A to the end of wave B. Though this one didn't show up immediately on a semilog scale, it lines up nicely
  on a regular scale:
  
  

So, the above arguments are why I think $0,27 to be a reasonable minimal target for the upcoming fifth wave. For the reason why I believe we are due a fifth wave, please refer to the Related Idea for a close-up of the triangle we are in right now (I think). :-)

There is another possibility emerging from this scenario, and that is that we might be seeing a very strong wave downwards after the $0,27 price level, which would very likely take out the low we had at $0,11. The present global situation and economic developments considering, it is not impossible that we are in a reprieve; a moment where we believe things will be alright before more bad news follows. As I do not take fundamentals into consideration when trading, this is more of an afterthought; make of it what you will.

I hope my analysis makes some sense and that the charts are clear enough to illustrate my points. This is, of course, not trading advice in any form, and you should always make up your own mind.

Happy trading!