|

XLM Price Forecast: Stellar has nowhere to go, but down

  • XLM price breakout from a symmetrical triangle continuation pattern projects further losses for the digital asset.
  • Potential for the 50-week simple moving average (SMA) magnet effect to arrest the developing decline.
  • Initial drop nearly registered an oversold condition on the six-hour Relative Strength Index (RSI), suggesting some bounce.

XLM price has broken the lower trend line of a symmetrical triangle pattern, making it the second triangle that has resolved to the downside over the last 21 trading days. Based on the current price structure, Stellar is positioned for further losses, potentially beyond the June 22 low.

XLM price begins the process of cleaning stops and fearful pockets

Since the June 22 low of $0.198, XLM price had been coiling in a symmetrical triangle pattern, liberating the oversold condition following the 40% drop from a previous triangle. However, it did not establish any milestones during the bounce that proposed a long-term bullish outcome for Stellar.

Fundamental to the symmetrical triangle pattern development was the role of the May 23 low of $0.274 and, more importantly, the critical 50-week SMA, currently at $0.269. Each provided some point of resistance for every intra-day pop higher during the triangle formation.

With yesterday’s breakdown from the triangle, Stellar investors should acknowledge that XRP price is vulnerable to a 34% correction from the breakout point at $0.256. The 34% measured move of the triangle forecasts a final low of $0.169. It would negate most of the 2021 gains and bust the support at the June low of $0.198 and the 78.6% Fibonacci retracement level of the March 2020-May 2021 advance at $0.191. Overall, it means a loss of 31% from the current XLM price of $0.246.

XLM/USD daily chart

XLM/USD daily chart

It is important to note that the 200-week SMA (mean) is at $0.180, so the measured move would signify a complete reversion to the mean and a confirmed reset for XLM price. Moreover, the total decline from the May high of $0.797 would be 79%.

The weekly chart below highlights the influence of the 200-week SMA on XLM price since the beginning of 2019.

XLM/USD weekly chart

XLM/USD weekly chart

The only way XLM price can void the bearish narrative is with a daily close above the merger of the May 23 low of $0.274 with the symmetrical triangle’s upper trend line at $0.282. But, a rise above $0.282 will not mean a buying stampede will reign over Stellar as the 50-day SMA at $0.326 or the apex of the preceding symmetrical triangle at $0.343 will provide sustainable resistance.

All technical points point to a continuation of the Stellar downward move, knocking out the stops and the fearful holders that populate lower levels. Moreover, XLM price should at least test the June 22 low, but the originating symmetrical triangle pattern projects a deeper descent, possibly to the 200-week SMA. It is an outcome that seemed impossible only a couple of months ago for the blockchain project.

Author

Sheldon McIntyre, CMT

Sheldon McIntyre, CMT

Independent Analyst

Sheldon has 24 years of investment experience holding various positions in companies based in the United States and Chile. His core competencies include BRIC and G-10 equity markets, swing and position trading and technical analysis.

More from Sheldon McIntyre, CMT
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

Avalanche struggles near $12 as Grayscale files updated form for ETF

Avalanche trades close to $12 by press time on Wednesday, extending the nearly 2% drop from the previous day. Grayscale filed an updated form to convert its Avalanche-focused Trust into an ETF with the US Securities and Exchange Commission.

Bitcoin slips below $87,000 as ETF outflows intensify, whale participation declines

Bitcoin price continues to trade around $86,770 on Wednesday, after failing to break above the $90,000 resistance. US-listed spot ETFs record an outflow of $188.64 million on Tuesday, marking the fourth consecutive day of withdrawals.

Michael Selig assumes role as new CFTC Chair, what does this mean for crypto?

Michael Selig has been sworn in to serve as the 16th Chairman of the Commodity Futures Trading Commission. Selig was confirmed by the US Senate to head the commission last week, following his October nomination by the US President Donald Trump.

Crypto.com hires sports trader for event prediction market-making

Crypto.com plans to recruit a quant trader for the sports market-making team to buy and sell financial contracts related to these events. Opponents argue that internal trading desks put operators or their affiliates on the opposite side of customer trades. 

Orange Juice Newsletter – Smart insights by real people. Every day.

A free newsletter highlighting key market trends to help traders stay a step ahead. Daily insights on the most relevant trading topics, compiled by our experts in an easy-to-read format so you never miss an important move.

Bitcoin: Fed delivers, yet fails to impress BTC traders

Bitcoin (BTC) continues de trade within the recent consolidation phase, hovering around $92,000 at the time of writing on Friday, as investors digest the Federal Reserve’s (Fed) cautious December rate cut and its implications for risk assets.