XRP Bulls to target $0.48 on a Dovish 25-Basis Point Fed Rate Hike

Key Insights:

• On Tuesday, XRP saw red for a fourth consecutive day, falling by 0.01% to end the day at $0.46472.
• A lack of SEC v Ripple news overshadowed US economic indicators and the US banking sector woes, leaving XRP in the red.
• The technical indicators are bearish, signaling a return to $0.43.

On Tuesday, XRP slipped by 0.01%. Following a 1.45% loss on Monday, XRP ended the day at $0.46472. Significantly, XRP extended its losing streak to four sessions.

After a choppy morning session, XRP fell to a late afternoon low of $0.45782. Steering clear of the First Major Support Level (S1) at $0.4556, XRP struck an evening high of $0.46627. However, falling short of the First Major Resistance Level (R1) at $0.4732, XRP eased back to end the day at $0.46472.

SEC v Ripple Silence Leaves XRP in the Hands of the Broader Market

It was a quiet Tuesday session. There were no SEC v Ripple case updates to influence investor sentiment, leaving XRP in the hands of the broader crypto market.

US economic indicators, the US banking sector crisis, and the US Government debt ceiling were areas of interest.

Weaker-than-expected JOLTs job openings and US factory orders eased bets of a 25-basis point Fed interest rate hike in June, supporting XRP and the broader crypto market.

However, the lack of Court rulings left investors wary. The extended silence has impacted investor optimism toward a Ripple victory against the SEC. The silence will likely continue to test buyer appetite until Judge Torres delivers Court rulings that could lead to a favorable settlement.

Amicus Curiae attorney John Deaton addressed settlement-related questions on Tuesday. Deaton had this to say about a Ripple settlement,

“Quite a few people ask why would Ripple settle if they won. First, I didn’t think say Ripple would agree to the same terms of a settlement they would’ve agreed to 2 years ago. It all depends on the ruling itself. Does Coinbase and Kraken immediately resist or wait for an appeal?”

Deaton added,

“If the SEC told Ripple it would issue a statement that all future sales of XRP are no securities (not saying it would) and not appeal if Ripple agrees to pay $50M, I believe the certainty and immediate return of liquidity to the US makes Brad Garlinghouse sign a check in seconds.”

Deaton concluded that it could be a different story if the Judge rules for XRP, resulting in liquidity returning to the US without businesses worrying about upsetting the SEC if they use XRP.

The Day Ahead

Investors should track SEC v Ripple case-related chatter and look out for Court rulings. However, a lack of updates would leave Binance and Coinbase (COIN)-related news and SEC activity to move the dial.

This afternoon, US economic indicators and the Fed will influence XRP and the broader crypto market. US ADP nonfarm employment change and ISM Non-Manufacturing PMI numbers will be in focus ahead of the Fed interest rate decision.

Another round of weak economic indicators would remove bets of a June interest rate hike despite sticky inflation and raise the prospects of rate cuts in H2 2023.

According to the CME FedWatch Tool, the probability of a 25-basis point May interest rate hike fell from 93.2% to 88.7% in 24 hours. Significantly, the chances of a 25-basis point June interest rate hike fell from 27.7% to 0.50%.

A dovish interest rate hike, with the Fed signaling an end to the monetary policy tightening cycle, would support an XRP breakout.

XRP Price Action

At the time of writing, XRP was down 0.79% to $0.46105. A mixed start to the day saw XRP rise to an early high of $0.46501 before falling to a low of $0.46028.

Technical Indicators

Resistance & Support Levels

XRP needs to move through the $0.4629 pivot to target the First Major Resistance Level (R1) at $0.4681. A breakout from the Tuesday high of $0.46627 would signal a bullish session. However, SEC v Ripple chatter and the Fed must support a breakout session.

In the case of an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4714 and resistance at $0.4750. The Third Major Resistance Level (R3) sits at $0.4798.

Failure to move through the pivot would leave the First Major Support Level (S1) at $0.4596 in play. However, barring a crypto event-fueled sell-off, XRP should avoid sub-$0.45. The Second Major Support Level (S2) at $0.4545 should limit the downside. The Third Major Support Level (S3) sits at $0.4460.

The EMAs and the 4-hourly candlestick chart (below) sent bearish signals.

At the time of writing, XRP sat below the 50-day EMA, currently at $0.46931. The 50-day EMA pulled back from the 200-day EMA, with the 100-day EMA converging on the 200-day EMA. The EMAs delivered bearish signals.

A move through R1 ($0.4681) and the 50-day ($0.46931) would give the bulls a run at R2 ($0.4714) and $0.4750. However, failure to move through the 50-day EMA ($0.46931) would leave S1 ($0.4596) in view. A move through the 50-day EMA would send a bullish signal.