XRP’s price chart is signaling the possibility of a major breakout, supported by growing activity in $5 strike call options on Deribit.
Despite a 10% drop this week, XRP is forming a bull flag pattern, which often indicates a pause before a continuation of the previous rally. This pattern typically emerges after a strong uptrend and suggests that the asset is gearing up for another surge. According to Charles Kirkpatrick, a noted market technician, bull flags that follow a rise of 90% or more tend to have a high success rate, with an average return of 69% on breakout.
XRP has experienced a significant rally of nearly 500%, reaching a peak of $2.9 within four weeks up to December 3. If this bull flag pattern plays out as expected, technical analysis suggests that XRP could rally to the $5 level. The price target is derived by adding the magnitude of the previous uptrend to the breakout point, which currently stands at around $2.5.
Meanwhile, activity in the options market is reflecting increasing bullish sentiment. The $5 strike call options on Deribit have gained notable traction, with 1.7 million contracts traded in the past 24 hours, making it the second-most traded XRP option. Additionally, the $5 strike is the most popular out-of-the-money call, with open interest of $1.25 million, indicating that traders are positioning for a potential price breakout above that level.
However, it’s important to remember that technical patterns are not always accurate predictors of price action, and options market sentiment can shift quickly. As such, it’s crucial for traders to keep an eye on broader market trends and sentiment before making any decisions.
