XRP Faces Further Downside Risk as Investors Await SEC v Ripple Ruling

Key Insights:

• On Wednesday, XRP ended the four-day losing streak, rising by 0.35% to end the session at $0.43055.
• SEC v Ripple silence and the US CPI Report delivered a choppy session.
• The technical indicators remain bearish, signaling a return to $0.40.

On Wednesday, XRP rose by 0.35%. Reversing a 0.05% loss from Tuesday, XRP ended the day at $0.43055. Despite the bullish session, XRP returned to sub-$0.42 for the second time in three sessions.

After a choppy morning session, XRP fell to a late afternoon low of $0.41259. XRP fell through the First Major Support Level (S1) at $0.4231 and the Second Major Support Level (S2) at $0.4172. However, finding late support, XRP rose to a session high of $0.43425. Coming up against the First Major Resistance Level (R1) at $0.4327, XRP eased back to end the day at $0.43055.

US Inflation Numbers Ended a Four-Day Losing Streak

It was a quiet session on Wednesday, with no SEC v Ripple case updates to influence. The lack of Court rulings from the SEC v Ripple case left investors cautious throughout the session. Investors expect Judge Torres to deliver rulings any time now.

The outcome of the SEC v Ripple case could materially alter the US crypto regulatory landscape.

While there were no updates to consider, US economic indicators delivered early afternoon support.

In April, the US core annual inflation rate softened from 5.6% to 5.5%, with headline inflation easing from 5.0% to 4.9%. Economists forecast the headline inflation rate to hold steady at 5.0%.

XRP responded positively to the CPI Report despite inflation being too high and reducing the chances of a 2023 interest rate cut.

According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike fell from 21.2% to 5.0% in response to the CPI Report. However, the chances of a June rate cut remained at 0%.

The Day Ahead

This afternoon, US economic indicators will influence, with US wholesale inflation and jobless claims in focus.

Softer wholesale inflation numbers and rising jobless claims would take further pressure off the Fed and support XRP and the broader crypto market. Economists forecast initial jobless claims to increase from 242k to 245k and for the producer price index to increase 2.4% year-over-year in April versus 2.7% in March.

Investors should also monitor Fed commentary after the latest round of inflation numbers. Hawkish Fed rhetoric would test buyer appetite.

However, while the US economic indicators and Fed chatter will influence, SEC v Ripple Court rulings would have more impact.

Investors should continue to track the crypto news wires for Court rulings from the ongoing SEC v Ripple case. A Court ruling from the SEC v Ripple case could come as early as today. A lack of SEC v Ripple case updates will likely continue to test buyer appetite.

SEC activity and Binance and Coinbase (COIN)-related news will continue to provide direction. Binance and Coinbase remain under the US Government spotlight.

XRP Price Action

At the time of writing, XRP was down 0.60% to $0.42795. A bearish start to the day saw XRP fall from an opening price of $0.43070 to a low of $0.42644.

XRP Technical Indicators

Resistance & Support Levels

XRP needs to avoid the $0.4258 pivot to target the First Major Resistance Level (R1) at $0.4390. A move through the Wednesday high of $0.43425 would signal a bullish session. However, SEC v Ripple chatter and the US economic indicators must support a breakout session.

In the case of an extended rally, XRP would likely test the Second Major Resistance Level (R2) at $0.4475 and resistance at $0.45. The Third Major Resistance Level (R3) sits at $0.4691.

A fall through the pivot would bring the First Major Support Level (S1) at $0.4173 into play. However, barring another crypto event or US CPI-fueled sell-off, XRP should avoid sub-$0.40. The Second Major Support Level (S2) at $0.4041 should limit the downside. The Third Major Support Level (S3) sits at $0.3825.

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 $0.44431. The 50-day EMA slid back from the 200-day EMA, with the 100-day EMA pulling back from the 200-day EMA. The EMAs delivered bearish signals.

A move through R1 ($0.4390) would give the bulls a run at the 50-day EMA ($0.44431) and R2 ($0.4475). However, failure to move through R1 ($0.4390) would leave S1 ($0.4173) and sub-$0.41 Major Support Levels in view. A move through the 50-day EMA ($0.44431) would send a bullish signal.