On September 19, the price of XRP fluctuated between gains and losses amid expectations that Ripple will finally prevail in its protracted legal dispute with the U.S. Securities and Exchange Commission (SEC).
On its Sep. 19 daily candlestick, the XRP/USD pair formed unusually sharp bullish and bearish wicks, dropping more than 1% to $0.35. In other words, its intraday performance suggested that traders were becoming more biassed.
The uncertainty may result from XRP's exposure to catalysts besides the SEC v. Ripple lawsuit. Specifically, the possibility that the Federal Reserve would raise its benchmark interest rates by an additional 75 or 100 basis points at its policy meeting on September 20.
As reported, fears of aggressive rate hikes have pressured the crypto market lower throughout the year, including Bitcoin (BTC) and Ether (ETH). XRP is also not immune, given the token’s consistently positive correlation with Bitcoin since October 2021.
For instance, XRP’s daily correlation coefficient with Bitcoin on Sep. 19 was 0.47. A reading of 1 means that the two assets move in lockstep.
Independent market analyst Cheds highlighted that XRP has been fluctuating inside a rectangular range since June, adding that “there’s nothing to be excited about” at present.
The range is defined by $0.38-$0.40 acting as resistance and $0.28-$0.30 acting as support. XRP’s price dropped after testing the resistance and, as of Sep. 19, was heading toward the support area, as shown below.
Interestingly, a move toward the rectangular range support could also trigger a classic bearish reversal pattern called the head-and-shoulders, defined by three consecutive peaks forming atop a common support level, with the middle peak (head) higher than the other two (left and right shoulders).
A head-and-shoulders pattern resolves after the price breaks below its support line and falls by as much as the maximum distance between the middle peak and the support. Applying this theory to XRP’s daily chart presents $0.242 as the downside target.
In other words, XRP price could lose another 30% by the end of this year, driven primarily by macro catalysts.