The recent XRP price action has caught the attention of crypto analyst Ali Martinez, who highlighted a bull flag pattern forming on the 4-hour candlestick chart. This highlight has come amidst a notable 4.5% decline in the XRP price in the past 24 hours.
However, the bull flag pattern has been in formation since the beginning of the month, with traders still speculating on the cryptocurrency’s next major move.
Bull Flag Formation Points Bullish, But TD Sequential Presents Sell Signal
Ali Martinez noted on X that XRP’s current chart structure resembles a bull flag pattern, which is a continuation signal that suggests it may soon resume its upward trajectory. The consolidation phase observed within the flag typically reflects market indecision, followed by a breakout in the direction of the preceding trend.
In the case of the XRP price, this market indecision has been highlighted by a correction since the XRP price reached a six-year high of $2.9 on December 3. This milestone was piggybacked on a 54% surge in the XRP price in the first three days of December. The correction has led to the creation of lower highs and lower lows, which has given rise to a downward-sloping flag on the 4-hour candlestick timeframe. Interestingly, this downtrend culminated in a minor break below $2, just around the 0.5 Fibonacci retracement level.
Keeping in mind the nature of the bull flag, the natural outlook is that of a breakout to the upside and a resumption of the prior uptrend. Despite the bullish implications of the bull flag, Martinez pointed out a conflicting signal from the TD Sequential indicator.
The TD Sequential indicator, which has been very efficient in predicting buy and sell points in the current cycle, recently flashed a sell signal on the 4-hour chart. According to Martinez, this suggests that the XRP price may face a brief correction before any significant breakout materializes.
XRP Price Outlook Remains Bullish
If a correction were to play out at this point, we could see the XRP price retest Fibonacci retracement levels. These retracement levels are the 0.618 and 0.5 Fib retracement levels from the $2.9 high, which correspond to $2.125 and $1.93, respectively.
From here, we could see the XRP price rebounding off any of these Fib retracement levels and regain the move upwards. At the time of writing, the XRP price is trading at $2.34, having reduced by 4.5% in the past 24 hours. This suggests that the sell signal predicted by the TD Sequential indicator is starting to play out as expected.
Nonetheless, the XRP price outlook remains bullish.l If the bull flag pattern plays out as predicted, a decisive breakout above the $2.46 resistance could act as a precursor for another notable XRP price surge. As Martinez noted, this bullish scenario would remain intact as long as key support levels hold during the correction phase.
Should the breakout occur, the XRP price could see an impressive surge toward the $4 mark, aligning with the 1.414 Fib extension level.
