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Why Is Stellar (XLM) Price Dropping? This Indicator Might Hold the Answer to Its Recovery

2 mins
Updated by Ryan James
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In Brief

  • The Stellar (XLM) price has been decreasing under a descending resistance trendline since July 12 when it was trading at a yearly high.
  • The daily timeframe Relative Strength Index (RSI) for XLM is below 50 and declining, indicating an ongoing bearish trend in the XLM price.
  • Despite the bearish XLM prediction, a breakout from the resistance trendline and reclaim of the $0.110 area will invalidate the breakdown.
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The Stellar (XLM) price has fallen under a long-term descending resistance trendline since July 13.

On October 9, XLM broke down from the $0.110 horizontal support area and was rejected when attempting to reclaim it. How long will this XLM price rejection continue?

Stellar Fails to Reclaim Long-Term Support

The daily time frame technical analysis for XLM shows that the price has decreased under a descending resistance trendline since July 12. At the time, the cryptocurrency had just reached its yearly high of $0.197.

During the descent, the altcoin broke down below the $0.110 area. When combined with the long-term descending trendline, the area created a descending triangle, considered a bearish pattern.

The Stellar price failed to reclaim the resistance trendline and the $0.110 resistance area but was rejected on October 16 (red icon).

This XLM price rejection catalyzed the current decrease.

Stellar Price Movement
XLM/USDT Daily Chart. Source: TradingView

The daily Relative Strength Index (RSI) indicates a bearish trend. Traders rely on this momentum indicator to evaluate whether a market is in an overbought or oversold condition, which helps them decide whether to buy or sell an asset.

When the RSI reading is above 50, the upward trend favors the bullish stance. Conversely, if the RSI reading is below 50, it suggests the opposite.

Given that the RSI is below 50 and declining, it indicates a bearish trend in the Stellar price.

However, it is worth mentioning that the indicator reached oversold territory on October 15. The previous two times (white icons) this occurred, a significant increase followed.

XLM Price Prediction: How Long Will Fall Continue?

Due to the bearish RSI and the failed attempt at a reclaim, the most likely future XLM outlook is the continuing decrease.

A drop that continues for the entire pattern’s height (black) will take the XLM price slightly below the $0.076 horizontal support area, which has been in place since March.

The decrease would be 30% when measured from the current price.

XLM Price Prediction
XLM/USDT Daily Chart. Source: TradingView

Despite this bearish XLM price prediction, the oversold RSI could catalyze an increase. For this to occur, the altcoin has to break out from the trendline and the $0.110 resistance area.

In that case, a 30% increase to $0.140 could occur. The magnitude of the increase would be in line with the previous upward movements (green) caused by the oversold RSI.

For BeInCrypto’s latest crypto market analysis, click here.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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