XRP price cautiously held above the key $2 support 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 currency will react to key macroeconomic events such as US Consumer Price Index data.
- The United States Senate will also have a markup of the CLARITY Act.
The ripple (XRP) token was trading at $2.0840, about 43% off its all-time high. This drop 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 release consumer price index data for December on Tuesday.
Data compiled by TradingEconomics shows that the headline CPI remained at 2.6% in December, while the core CPI fell 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 recent months. A higher than expected inflation report will be bearish for XRP and other cryptocurrencies.
Meanwhile, XRP price will react to the next profit margin of the CLARITY Law at the end of this week. This bill seeks to simplify cryptocurrency regulation by separating the functions 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 main companies that will publish their figures are Goldman Sachs, Bank of America, JPMorgan and BlackRock. Strong gains can boost the stock market, which can translate into more gains in the crypto industry.
XRP Price Technical Analysis
The weekly time frame chart indicates that XRP price has formed a highly bearish chart pattern known as dragonfly doji. This candle is characterized by a long upper shadow and a small body. It often leads to more disadvantages over time.
The 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 fallen below the 50- and 100-week weighted moving averages.
Therefore, the most likely scenario is that the stock token falls to the next key support level at $1.6200. A drop below that level will indicate a further decline, potentially to $1.50.
