Stellar (XLM) Pumps But Fails to Clear Long-Term Resistance

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In Brief
  • Stellar is facing resistance at $0.36 and has support at $0.225.

  • The price has broken down from a short-term ascending support line.

  • XLM has likely completed wave 1 of a long-term bullish impulse.

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The Stellar Lumens (XLM) price has been moving upwards at an accelerated pace since the beginning of November 2020 but has failed to clear a crucial resistance area.



While short-term bounces could occur while XLM is trading above $0.267, it appears that XLM has yet to complete its correction.

 

XLM Long-Term Resistance

XLM has been moving upwards since the beginning of March 2020.  The upward movement accelerated in November 2020 and proceeded to reach a high of $0.35 on Jan. 6.



However, XLM was rejected by the $0.36 resistance area, which is the 0.382 Fib retracement of the entire downward move from the all-time high price.

Technical indicators provide a mixed outlook. The MACD is above 0 and increasing, while the RSI has generated bearish divergence and is falling.

The Stochastic oscillator is increasing but has yet to make a bullish cross (shown with the green circle). Therefore, a look at lower time-frames is required in order to better estimate its future movement.

XLM Chart By TradingView

Future Movement

The daily chart shows a support area at $0.225, which has been validated in the form of a long lower wick on Jan. 12.

However, technical indicators are bearish. The MACD has nearly crossed into negative territory, the Stochastic oscillator is falling, and the RSI has dropped below 70.

A bearish Stochastic cross and a MACD cross into negative territory would likely confirm that the trend is bearish.

XLM Chart By TradingView

Cryptocurrency trader @IholdBitcoin stated that XLM is likely to begin another upward move soon once if it breaks out from the current symmetrical triangle.

Source: Twitter

However, XLM has broken down from the support line of the triangle (dashed) since the tweet.

XLM is still trading above the 0.5 Fib retracement support at $0.267, so the possibility of a short-term bounce remains.

Nevertheless, it does seem that the long-term trend is bearish.

XLM Chart By TradingView

Wave Count

The wave count suggests that XLM has completed wave 1 of a long-term bullish impulse (shown in white), which began with the March lows.

The sub-wave count (orange) shows that this is a leading diagonal since sub-wave 4 entered into sub-wave 1 territory.

If correct, the price has begun its corrective second wave, which could end at either the 0.382, 0.5, or 0.618 Fib retracement levels ($0.22, $0.19, and $0.15 respectively).

The latter two levels are more commonly reached in second waves and are also horizontal support levels.

XLM Chart By TradingView

Conclusion

While XLM could bounce in the short-term to validate the resistance line near $0.30, it seems that it has yet to complete its correction.

A breakout from the resistance line would likely invalidate this possibility and suggest that the price is heading higher.

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Disclaimer

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 is a cryptocurrency enthusiast and financial trader. After obtaining a masters degree in Financial Markets at the Barcelona Graduate School of Economics he began working at the Ministry of Economic Development in his native country of Kosovo. In 2019, he decided to focus full-time on cryptocurrencies and trading.

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