Ripple is an odd example when it comes to explaining cryptocurrencies.
It acts like one, functions like one, and it has the underlying technology of virtually all crypto coins, but it differs in its primary objective.
Whereas cryptocurrencies look to take away the influence of large financial institutions and focus solely on individual ownership of value, Ripple looks to create a cryptocurrency that works as a “fiat” translation for overseas trade.
Why do we care about this difference?
Well, you’re about to find out how this helps you trade it.
Ripple is known as the banks’ crypto coin. As financial institutions are a major part of the foreign exchange market, almost literally giving life to it, this is an enormous injection of liquidity for the coin - it’s common sense.
True to that fact, Ripple is often considered the most liquid cryptocurrency out of all, even Bitcoin! So, scalpers and day traders will have a blast with it.
Speaking of scalping, let’s have a look at this 1-minute chart:
Do you see how different this is from other coins where the minute graphs look like random candles scattered with huge gaps?
In this chart, you may spot a nice uptrend at 14:20. This uptrend was tradable and would have offered a nice profit for those who spotted it.
How’s that possible you ask? Simple, chart patterns:
Can you recognize that? It looks like a cup of tea or coffee, right? Well, the name of that pattern is “cup and a handle”, and it indicates a trend break as traders look for short-term profits before continuing the real momentum of the trend.
This pattern usually means that the trend will continue, so the point to place a trade was as soon as the handle formed upwards.
We could have traded this setup manually by opening a trade at 0.46500 and try to just follow the trend. Three minutes later, however, we can spot something worrying: the third candle closed way down from the high with the formation of a shooting star pattern (inverted hammer).
Sure enough, the lost momentum was confirmed by the next red candle, but being a small one and the next candle not breaking the low of that red candle, was an encouraging sign that the trend may continue.
Another bearish candle appears (the second blue arrow), but it again didn’t break the low of the previous candle so the trade can be maintained further. But that happened the next minute, and the break below the low of the previous candle was an exit signal which would have provided a nice profit of 0.0015 profit.
This is how real trading can work easily once you have the right tools and knowledge.
Let’s no look at another example. Here, we can see a double bottom forming on the 5-minute Ripple chart - meaning a reversal is potentially coming. We can trade it as follows:
Go long when you see that the price has confirmed the double bottom and that the reversal is very strong.
The S/L is placed safely at the low of the big green bullish candle.
Place theT/P a bit under the support zone on 5m chart.
Since double bottoms (or tops) are mostly safe to trade, this position closes off with a profit of 0.0015.
For trading the Ripple cryptocurrency, as usual Price Action and Chart Patterns prove to be valuable tools that provide high-quality signals both for trade entries and for exits.
With that said, I wish you luck in your trading and take care!