NOIDA (CoinChapter.com) — The price of XRP has demonstrated resilience amidst market volatility, maintaining stability around $2 despite a nearly 14% decline in recent sessions. The performance of the token faces uncertainty as the U.S. Securities and Exchange Commission (SEC) continues its legal battle against Ripple Labs.
The potential threat of an SEC appeal challenging a July 2023 court ruling, which deemed Ripple’s programmatic XRP sales on public exchanges to retail investors non-violative of securities laws, could be the underlying reason for XRP’s recent drop. With anticipated regulatory shifts under new SEC leadership and increased discussions regarding the possibility of an XRP-spot ETF, the appeal could serve as a significant catalyst, influencing XRP’s market momentum in the upcoming months.
XRP Price Fails To Break Out Of Bullish Setup
Meanwhile, the XRP USD pair failed to break out of a bullish technical setup known as the ‘bull flag pattern,’ as the upper trendline of the pattern 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, signaling 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, 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 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 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 restart a rally and test their strength against the flag’s resistance once more. A resolution of the Ripple SEC lawsuit or a softer stance from the incoming new chair could help add tailwinds to the token’s momentum.
EMA Resistance Next Target For Bulls
Meanwhile, bulls face a steep challenge 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 saw the token reach 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 the path to target the resistance near $2.6 before corrections pare gains. On the other hand, a reversal and break below the pattern would force the token to test the support near $1.6. Furthermore, failure of the immediate support could 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.