On Apr 4, the price of Stellar Lumens reached a high of approximately $0.137. A reversal brought the price to a low of $0.114 on Apr 5.
Since then, XLM/USD has been on a steady upward trend despite volatility.
At the time of writing on Apr 8, it as trading around $0.13.:
Will the price of Stellar lumens keep going up or should we expect a reversal soon?
Let’s find out:
Stellar Lumens (XLM): Highlights for April 8, 2019
- The price of Stellar lumens has been on an uptrend since Apr 4.
- Since then, XLM/USD has been trading inside an ascending wedge.
- The price has been trading inside a long-term ascending channel since Mar 4.
- Bearish divergence is developing in the RSI and the MACD.
- There is resistance near $0.135 and support near $0.11
Ascending Wedge
On Apr 4, the price made a low of $0.114. A gradual increase has been observed since. During this time, volatiltiy has sitll been experienced, but each low has been higher than the last.
Tracing these lows gives us a descending support line:
Apr 6, the price reached a high of $0.13. Several market cycles have been completed since, with each high being higher than the previous one.
Tracing these highs gives us an ascending resistance line.
The resistance and support lines combine to create an ascending wedge:
The ascending wedge is a bearish pattern. Price losses—and an eventual breakdown below support—are often signified by this pattern.
To determine whether a breakdown is likely, we need to take a look at some technical indicators.
Bearish Divergence
We can see that lumens have been trading inside an ascending channel since Mar 4.
Furthermore, the ascending wedge outlined in the section above is a short-term trading pattern located within a long-term trading pattern. It is drawn with dashed lines inside the long-term channel.
On Apr 3, the price made a high of $0.137. It reached the same level on Apr 8. Similarly, the RSI and the MACD made the first high on Apr 3. However, they have continued to generate lower values since.
This is known as bearish divergence and often precedes price decreases.
The use of these indicators suggests price losses in the future. A breakdown from the wedge is likely.
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Reversal Areas
To determine actual possible future price levels, we incorporate resistance and support areas into the analysis.
The closest resistance area is found near $0.135. It coincides with the top of the wedge and the long-term ascending channel. If the price were to break out of this area, rapid price increases could follow. We believe this to be unlikely.
The closest support area is found near $0.12. If the price were to break down from the wedge, it is likely that it would reach this area.
Summary of Analysis
Based on this analysis, the price of XLM is likely to decrease in the near future, breakdown from the wedge, and eventually, reach the support line of the channel.
Do you think the price of XLM will break down from the wedge? Let us know in the comments.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
