Ripple continues to trend lower after recently breaking below a short-term consolidation pattern and completing a pullback. Price now appears to be forming a descending channel formation and is in the middle of a correction again.

Applying the Fib tool on the latest swing high and low on the 1-hour time frame shows that the 61.8% retracement level is close to the channel resistance and a former support area. However, price already seems to be resuming its selloff from here.

A higher correction could last until the actual channel resistance at the 0.2600 major psychological level. This is also close to the 100 SMA dynamic inflection point. The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside.

Also, the gap between the moving averages is widening to reflect strengthening bearish pressure. The 200 SMA dynamic inflection point could be the line in the sand for this downtrend as a break past that level could draw more buyers in.

Stochastic is pointing down to show that sellers are regaining control of price action. However, RSI is still on the move up to indicate that there’s some bullish momentum left, possibly for a higher retracement before more bears join in. Once that happens, Ripple could head back down to the channel support around 0.2300 or until the swing low around 0.2250.

Dollar volatility is expected to pick up midweek as the FOMC statement is scheduled then. An interest rate hike of 0.25% is expected but traders are wary that the central bank might hint that they’d slow down their pace of tightening. Apart from that, the focus on balance sheet unwinding could also lead many to speculate that additional rate hikes won’t be needed soon.

Besides, data from the US economy has shown a bit of a slowdown. Policymakers have shrugged off the weaker than expected Q1 GDP reading, which has later on been revised higher. However, it’s also worth noting that the May NFP reading has been a disappointment so central bank officials might scale back their hawkishness this time.

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