NOIDA (CoinChapter.com) — XRP price has shown resilience despite market volatility, holding steady around $2 despite a nearly 14% drop in recent sessions. The token’s performance faces uncertainty as the U.S. Securities and Exchange Commission (SEC) continues its legal battle against Ripple Labs.
The threat of an SEC appeal challenging a July 2023 court ruling that deemed Ripple’s programmatic XRP sales on public exchanges to retail investors non-violative of securities laws could be the reason behind XRP’s recent drop. With regulatory shifts expected under new SEC leadership and increased chatter about the possibility of an XRP-spot ETF, the appeal could act as a major catalyst, influencing XRP’s market momentum in the coming months.
XRP Price Fails To Break Out Of Bullish Setup
Meanwhile, the XRP USD pair failed to break out of a bullish technical setup called the ‘bull flag pattern,’ following the pattern’s upper trendline rebuffing XRP price action. The rebuttal could also be why the Ripple token fell over 14% since Dec. 25.
A bull flag pattern is a common continuation formation in technical analysis. It signals the potential for a strong uptrend to resume. The pattern consists of two components: the flagpole and the flag. The flagpole forms after a steep, near-vertical rally driven by aggressive buying pressure. This is followed by a consolidation phase, which forms the flag.
Prices trade within a narrow, downward-sloping, or sideways channel during this phase. Traders temporarily take profits, but bulls maintain control, preventing significant declines.
The consolidation reflects market participants reloading positions, creating a base for the next leg up. Importantly, the selling pressure during the flag phase is relatively muted, signaling that the uptrend remains intact.
When the breakout occurs above the flag’s upper boundary, it continues the prior uptrend. The breakout volume is a critical confirmation of the pattern, indicating renewed bullish momentum.
The price target for a bull flag breakout is calculated by adding the length of the flagpole to the breakout level. Applying this to XRP’s current setup, the flagpole extends from its recent vertical rally, suggesting a potential price target near $5.73—an 184% increase from current levels.
However, bulls would need to restart a rally and test their might against the flag’s resistance again. A resolution of the Ripple SEC lawsuit or a softer stance from the incoming new chair could help add tailwinds to the token’s sails.
EMA Resistance Next Target For Bulls
Meanwhile, bulls face a steep task as the 20-day EMA (red wave) resistance near $2.21 has proved difficult to conquer. Despite a slight uptick of nearly 5% on Dec. 31, which saw the token reach a daily high near $2.15, XRP price action seems firmly in bears’ grips.
Breaking above the immediate resistance would place XRP price on the path to target the resistance near $2.6 before corrections pair gains.
On the other hand, a reversal and breaking below the pattern would force the token to test the support near $1.6. Moreover, failure of the immediate support might result in the XRP price dropping to the support near $1.28.
The RSI for XRP remained neutral, with a score near 49.53 on the daily charts.
