XRP price remained cautiously above the key support at $2, but could be at risk of a big drop after forming a dragonfly doji candlestick pattern on the weekly chart.
Summary
- XRP price has formed the highly bearish dragonfly doji candlestick pattern on the weekly chart.
- The coin will react to key macro events like the US Consumer Price Index data.
- The US Senate will also have a markup of the CLARITY Act.
The Ripple (XRP) token was trading at $2.0840, down by roughly 43% from its all-time high. This decline has coincided with the broader sell-off in the cryptocurrency industry.
The decline could occur as market participants monitor broader macroeconomic events this week. The Bureau of Labor Statistics will publish the December Consumer Price Index data on Tuesday.
Data compiled by TradingEconomics shows that the headline CPI remained at 2.6% in December, while the core CPI retreated from 2.7% to 2.6%.
Still, there are signs that inflation will continue to decline, as crude oil and mortgage rates have fallen in the past few months. A higher-than-expected inflation report will be bearish for XRP and other cryptocurrencies.
Meanwhile, the XRP price will react to the upcoming markup of the CLARITY Act later this week. This bill seeks to simplify cryptocurrency regulation by separating the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Another notable catalyst for XRP and other cryptocurrencies will be the upcoming earnings season, which begins on Tuesday. Some of the top companies that will publish their numbers are Goldman Sachs, Bank of America, JPMorgan, and BlackRock. Strong earnings may boost the stock market, which may translate to more gains in the crypto industry.
XRP price technical analysis
The weekly timeframe chart indicates that the XRP price has formed a highly bearish chart pattern known as a dragonfly doji. This candle is characterized by a long upper shadow and a small body. It often leads to more downside over time.
Ripple token also formed a double-top pattern at $3.3962 and a neckline at $1.6200, its lowest level in April last year. It has also dropped below the 50-week and 100-week Weighted Moving Averages.
Therefore, the most likely scenario is where the stock token drops to the next key support level at $1.6200. A drop below that level will indicate further downside, potentially to $1.50.
