At BeInCrypto, we publish regular price analyses and predictions for various cryptoassets. In our Apr 5 analysis of Stellar lumens (XLM), we predicted the price would decrease towards the support line of the channel. It reached a low of $0.121 on Apr 6, but rebounded the next day. We still believe that the price will reach the area within the next few days.
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.:
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
In this section, we analyze the price of XLM/USD at one-hour intervals from Apr 4 to Apr 8 to trace the current trading pattern.
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
In this section, we analyze the price of XLM/USD at four-hour intervals from Mar 1 to Apr 8 to trace the long-term trading pattern. In addition, we incorporate technical indicators into the analysis.
About the Indicators: The relative strength index (RSI) is an indicator which calculates the size of the changes in price in order to determine oversold or overbought conditions in the market. The moving average convergence divergence (MACD) is a trend indicator that shows the relationship between two moving averages (long and short-term) and the price. It is used to measure the strength of a move.
Combining RSI and MACD bullish/bearish divergence essentially predicts price fluctuations. They are traced below:
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.Resistance and Support areas are created when the price visits the same level several times. In case a breakout/breakdown occurs, they can create possible areas of reversal.
These are shown in the graph below:
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.
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In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
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.
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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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