Recently, XRP has made a significant stride, setting a positive precedent for Bitcoin, the market leader.
According to a CoinDesk report published on 20 July 2023, XRP, a digital asset primarily used for payments, has seen a huge surge in the past week, marking its best performance since August 2021. This surge has apparently propelled XRP prices above a key technical analysis indicator known as the “Ichimoku Cloud” on the weekly chart, signaling a bullish breakout. However, Bitcoin has yet to replicate this achievement.
The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a popular technical analysis tool that offers a comprehensive view of a financial asset’s price action. It consists of five lines, each providing unique information about the price action:
- Tenkan-sen (Conversion Line): This line is the midpoint of the highest and lowest prices over the last nine periods. It’s a faster-moving line that can signal potential trend changes.
- Kijun-sen (Base Line): This line is the midpoint of the highest and lowest prices over the last 26 periods. It’s slower-moving and can act as a trigger line for buy or sell signals when crossed by the Conversion Line.
- Senkou Span A (Leading Span A): This line is the midpoint of the Conversion and Base Line, plotted 26 periods ahead. It forms one edge of the “cloud.”
- Senkou Span B (Leading Span B): This line is the midpoint of the highest and lowest prices over the last 52 periods, plotted 26 periods ahead. It forms the other edge of the “cloud.”
- Chikou Span (Lagging Span): This line is the closing price of the current period, plotted 26 periods behind.
The area between the Senkou Span A and Senkou Span B forms the “cloud.” Prices crossing above or below the cloud typically indicate a bullish or bearish trend change.
As per the CoinDesk report, XRP has established a firm position above the Ichimoku Cloud, while Bitcoin remains confined within a narrow range below the cloud resistance (upper end). This breakout by XRP follows a year-long consolidation or basing pattern and suggests the potential for further gains.
“The move is meaningful on the chart because it resolves a year-long basing process higher. Intermediate-term momentum is positive and there are (surprisingly) no signs of upside exhaustion, supporting upside follow-through, with next resistance near $0.92,” said Katie Stockton, founder and managing partner at Fairlead Strategies, in a note to clients, as quoted by CoinDesk.
The CoinDesk report also mentioned that a similar bullish outlook awaits Bitcoin if it can break through the higher side of the Ichimoku Cloud, with the next resistance level at $31,900.
At the time of writing, XRP is trading at $0.8230, while Bitcoin is hovering around $30,218.
Featured Image Credit: Photo / illustration by abogawat via Pixabay
