NOIDA (CoinChapter.com) — The price of XRP has demonstrated resilience amidst market volatility, remaining steady around $2 despite a nearly 14% decline in recent sessions. The token’s performance is shrouded in uncertainty as the U.S. Securities and Exchange Commission (SEC) continues its legal battle with Ripple Labs.
The potential threat of an SEC appeal against a July 2023 court ruling, which found that Ripple’s programmatic XRP sales on public exchanges to retail investors did not violate securities laws, may be a contributing factor to XRP’s recent drop. With regulatory changes anticipated under new SEC leadership and increasing discussions regarding the possibility of an XRP spot ETF, the appeal could serve as a significant catalyst, impacting XRP’s market momentum in the months ahead.
XRP Price Fails To Break Out Of Bullish Setup
Meanwhile, the XRP USD pair has failed to break out of a bullish technical setup known as the ‘bull flag pattern,’ as the pattern’s upper trendline has rebuffed XRP price action. This rebuttal could also explain why the Ripple token has fallen over 14% since December 25.
A bull flag pattern is a common continuation formation in technical analysis, indicating the potential for a strong uptrend to resume. The pattern comprises two components: the flagpole and the flag. The flagpole forms after a steep, near-vertical rally driven by aggressive buying pressure, followed by a consolidation phase that forms the flag.
During this phase, prices trade within a narrow, downward-sloping, or sideways channel. 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 upward. Importantly, the selling pressure during the flag phase is relatively muted, signaling that the uptrend remains intact.
When a breakout occurs above the flag’s upper boundary, it continues the preceding uptrend. The breakout volume serves as 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 increase of 184% from current levels.
However, bulls would need to reignite a rally and test their strength against the flag’s resistance again. A resolution of the Ripple SEC lawsuit or a softer stance from the incoming new chair could provide additional support for the token.
EMA Resistance Next Target For Bulls
Meanwhile, bulls face a challenging task as the 20-day EMA (red wave) resistance near $2.21 has proven difficult to overcome. Despite a slight uptick of nearly 5% on December 31, which brought the token to a daily high near $2.15, XRP price action appears firmly under the control of bears.
Breaking above the immediate resistance would position XRP price on a path to target the resistance near $2.6 before any corrections pair gains. Conversely, a reversal and break below the pattern would force the token to test the support near $1.6. Moreover, failure to hold 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.
