The Stellar (XLM) price has fallen since its yearly high on July 13, creating successive long upper wicks.
However, the price still trades above its breakout level, having validated it as support with the ongoing bounce.
Stellar Price Bounces After Returning to Support
In the weekly time frame technical analysis, it can be observed that XLM’s price recently surpassed the long-standing 400-day resistance at $0.13 on July 10, resulting in a new yearly high at $0.20.
This breakout from a significant long-term level often suggests the initiation of a bullish trend reversal.
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Following the high, XLM experienced a notable decline, forming a long upper wick (red icon). This is considered a sign of selling pressure, indicating that buyers do not have enough strength to sustain the increase.
Nevertheless, the price has managed to stay above the $0.13 area. It bounced and confirmed it as support this week. Such behavior is typical after a price breakthrough of a resistance level.
The weekly Relative Strength Index (RSI) is providing a positive indication. Traders commonly use the RSI as a momentum gauge to assess whether a market is overbought or oversold, aiding them in deciding whether to accumulate or sell an asset.
When the RSI reading is above 50 and the trend is upward, it suggests an advantage for the bulls, whereas a reading below 50 indicates the opposite. The RSI is rising and remains above 50, both of which are signs of a bullish trend.
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XLM Price Prediction: Is the Correction Complete?
According to the Elliott Wave analysis conducted on the daily time frame, there is a positive outlook for XLM’s price. Technical analysts who use the Elliott Wave theory study long-term price patterns and investor psychology to forecast trends.
The current Elliott Wave count (white) suggests that XLM’s price is currently in wave four of a five-wave upward movement. Wave four has taken the shape of a triangle, which is the most common pattern in this particular wave.
If this count is accurate, it means that the price has already reached a local bottom and is likely to rise toward the next resistance level at $0.23. A corrective phase would follow this completion of the five-wave increase. A breakout from the triangle will confirm this possibility.
It’s important to note that while this prediction is bullish, there is a crucial condition to keep in mind. If the price drops below the high of wave one (indicated by the red line) at $0.12, it will invalidate the bullish count.
The trend would turn bearish in such a scenario, and the XLM price could decline to the next support level at $0.09.
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