Godbole: XRP Price Shows Bull Flag Formation as $5 Call Options Heat Up.

XRP is showing promising signs of a potential breakout, with its price chart signaling a bullish trend and increased activity in options markets supporting the possibility of further gains.

Despite a 10% dip this week, XRP’s price action has taken the form of a bull flag, a technical pattern that suggests a consolidation before another upward move. This pattern typically occurs after a sharp rally and is often followed by a resumption of the preceding trend. According to market expert Charles Kirkpatrick, “A breakout should be expected in the direction of the preceding trend, provided it is steep and sharp,” adding that “Flags preceded by a rise of 90% or more have almost zero failure rate and an average return of 69%.”

XRP’s recent rally, which saw the coin surge nearly 500% to $2.9 by December 3, could be setting the stage for another significant move. If the bull flag pattern plays out, it could drive the price to as high as $5, based on the measured height method, which adds the size of the previous uptrend to the breakout point at $2.5.

In the options market, there has been notable activity in the $5 strike call options on Deribit. These calls have gained attention as the second-most traded XRP options in the past 24 hours, with 1.7 million contracts exchanged, according to Amberdata. Additionally, the $5 call option holds the highest open interest for out-of-the-money contracts, with a notional value of $1.25 million, according to Deribit data. This indicates a bullish sentiment among traders positioning for a potential move above $5.

However, as always with technical analysis, it’s important to be cautious, as patterns don’t always unfold as expected, and market conditions can shift quickly. Monitoring overall market sentiment and broader trends is crucial to understanding potential future movements.