Both XRP and Stellar lumens (XLM) have both initiated rapid upward moves recently. However, after reaching their respective resistance areas, swift reversals ensued.
This might be a response to Bitcoin’s recent price fluctuations. However, there may be other reasons for their respective falls.
XRP, for example, has been underperforming throughout 2019 compared to Bitcoin and major altcoins. On the hand, the Stellar network recently experienced two-hours downtime when validators went missing.
In this article, we examine the recent rapid upward movements and reversals alongside long-term price fluctuations, trading patterns, and technical indicators. This allows us to predict possible future movements. The major findings of our analysis are summarized in the conclusion where the winner of this analysis is selected based on future price potential.
Rapid Upward Moves
XLM To the Resistance
The price of XLM reached a low of $0.073 on Feb 7. A gradual increase ensued and the price reached a high of $0.097 on Feb 19. Since then, XLM/USD has since been trading inside the broadening ascending channel outlined below:
Since the beginning of the channel, the price has increased by 84%. It is currently trading in the middle of the channel.
The current daily candle is shaping up to be a bearish shooting star. This indicates that a possible reversal may begin. This would be confirmed if the closing prices are lower than the opening prices. At the time of writing, this holds true.
XRP Misses Support
The price of XRP/USD dropped to the major support area near $0.3 on Apr 25. A gradual upward move began. It intensified on May 14. The price reached highs of $0.47 on May 16. This wick was slightly above the major resistance area near $0.45.
Unlike XLM, however, XRP has not been following a clear trading pattern. The support and resistance area defined above are traced in the graph below:
The current daily candle is shaping up to be a bearish engulfing candle. This would be completed if the closing price is lower than the opening price of yesterday’s candle, which was $0.405.
These patterns, however, are not sufficient in predicting future price movements. In order to do that, we need to take a look at both coins in a shorter time-frame alongside technical indicators.
Lumens Inside a Broadening Channel
In order to determine whether the price of XLM will break out or decrease towards the support line, we have outlined the price alongside the RSI and the MACD below:
Bearish divergence is emerging in both the RSI and MACD which suggests that the price will decrease. It appears possible that the price may continue falling to reach the support area near $0.12 in the short-term.
It is also possible that the price of XLM will continue dropping as a response to the recent downtime on the network. However, this is difficult to evaluate at the current time because XLM, like many other altcoins, appear to be following trends recently set by Bitcoin.
Since the price is trading in the middle of the channel, we cannot initiate a trade setup. Our previous setup was unsuccessful and our stop loss of only 2.4% was triggered.
XRP’s Ascending Channel
The price of XRP reached highs of $0.399 on May 14. It decreased to reach a low of $0.366 the same day. It was trading inside the ascending channel outlined below until May 16 when the price broke down from the support line:
It is possible that the price may rebound back into the short-term channel. However, if the breakdown was valid, we might expect more significant price losses.
In order to determine the validity of the breakdown, we have outlined the price of XRP at two-hour intervals alongside volume and the RSI in the graph below. Two possible support areas are also traced:
XRP recently reached the first support area shortly after the breakdown. This occurred with average volume, which that the sellers do not have significant strength to push the price back up. Furthermore, the drop was preceded by bearish divergence in the RSI.
Therefore, we believe that the price will continue to decrease toward the next support area at $0.37.
Due to the current position of the price, no profitable trading setup was identified.
To conclude, both XLM and XRP began rapid upward moves over the last few days. After reaching their major resistance areas, they began swift reversals.
XLM is trading inside an ascending broadening channel and has developed significant bearish divergence in both the RSI and the MACD. On the other hand, XRP recently broke down from a short-term ascending channel. The breakdown was preceded by bearish divergence in the RSI.
We believe that XLM has a higher growth potential than XRP. This is due to the fact that the latter underwent a breakdown. No possible trade setups were identified.
A summary of our findings is presented in the table below:
|Long-term Pattern||Rapid upward move||Ascending broadening channel||Tie|
|Short-Term Patterns & Indicators||Breakdown from an ascending channel.||Bearish divergence inside an ascending broadening channel||XLM|
Do you think the price of Stellar lumens will drop towards the support line? Will XRP continue its breakdown?