The Stellar (XLM) price is consolidating inside a symmetrical triangle right below a long-term resistance area. While it is possible that XLM breaks down from the triangle and reaches a slightly lower low, the long-term trend seems to be bullish and XLM is expected to eventually break out above the resistance area.
During the week of Nov. 16-23, the XLM price price created a significant bullish candlestick in the weekly time-frame. XLM followed it up with another considerable increase the next week. It culminated with a high of $0.23; a more than 200% increase in just two weeks.
XLM trades currently only slightly below the long-term $0.19 resistance area. It has not closed above this area since it initially broke down on Oct. 2018.
Technical indicators provide somewhat mixed signals. While the Stochastic Oscillator made a bearish cross (red arrow in the image below), both the MACD and RSI are still increasing.
The closest, sufficiently validated support area is all the way down at $0.08. While the $0.11 area could possibly act as support (solid black line), it has not yet been confirmed as such.
(Note: The logarithmic chart is used in the image below in order to better visualize large price fluctuations)
The daily chart shows that the rejection from the long-term resistance area was preceded by a bearish divergence in the daily RSI. In addition, XLM created several long upper wicks prior to moving downwards, in a decrease that is still ongoing.
The main support area is found between the 0.5-0.618 Fib retracement levels, at $0.132-$0.151.
Indicators in the daily time-frame are neutral/bearish, since the RSI has decreased below 70 & the MACD has lost steam. However, it has not crossed below 0 nor has the Stochastic Oscillator made a bearish cross.
The even shorter-term two-hour chart shows a developing symmetrical triangle, with XLM having just bounced at its support line. However, there is very strong resistance at $0.18, coinciding with both a horizontal level and the descending resistance line drawn from the Nov. 26 highs.
Technical indicators are mixed. While the MACD shows signs of strength, suggesting a possible breakout could ensue, the RSI is below 50 and possibly generating hidden bearish divergence.
Therefore, until XLM clearly breaks out above the $0.18 area and validates it as support, we cannot consider the trend to be bullish.
Cryptocurrency trader @pakicrypto outlined a XLM chart which shows a symmetrical triangle, and stated that the price is ready to break out. The triangle coincides with that which we have outlined, but due to the conflicting readings from indicators, a look at the wave count is required in order to determine if XLM will break out.
Beginning in March, XLM seems to have initiated a bullish impulse (shown in white below), currently being in the third wave, which has become extended. The sub-wave count is given in orange, and XLM is in sub-wave 4.
A likely target for the top of the third wave is found at $0.35, the 3.61 Fib extension of wave 1 and a horizontal resistance level.
The 2.61 or 4.61 Fib extension levels could also serve as the top, but are less likely to do so.
A closer look at the movement reveals that is is possible that XLM has already reached the bottom of sub-wave 4, due to the bounce right at the support line of the parallel channel. This would also fit with the triangle possibility, since triangles are B or 4 waves.
However, if a breakdown from the triangle occurs, XLM would likely not find support all the way down to $0.106. This is the 0.786 Fib retracement level and the resistance line of a channel connecting sub-waves 1-2. This deep retracement is known as a 4th wave pullback.
To conclude, XLM is expected to eventually break out above the resistance area and reach a high near. However, whether it breaks down from the triangle will determine if XLM has reached a short-term low or if another low is required before XLM breaks out.
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