• XLM price stakes support at the critical 61.8% Fibonacci retracement level.
  • Shooting star candlestick pattern keeps bears in control.
  • Bearish momentum divergence on multiple time frames adds to downward pressure.

XLM price realized a bearish shooting star candle pattern on May 10 after testing the channel’s upper trend line. As long as Stellar remains below the candle’s high, the outlook is pointed bearish, targeting a 40% decline.

XLM price reveals few places to hide

Stellar rallied strongly into February, but XLM price has only managed to print marginal new highs in April and again in May, delivering a disappointing 30% return from the February high to the May high.

On May 10, XLM price closed with a bearish shooting star candlestick on the daily chart. It was an eventful end to Stellar’s first attempt to release above the multi-month channel. The candlestick reversal pattern features buyers’ struggles to lift prices higher against the overpowering distribution of the sellers.

On May 12, XLM price declined below the shooting star low at $0.618, confirming the pattern and a bearish outlook. 

To add to the heightened bearishness, the daily and weekly Relative Strength Indexes (RSI) have not printed a new high along with XLM price since February, creating a bearish momentum divergence. 

Downside support begins at the 61.8% retracement of the April-May rally at $0.539 and then the 50-day simple moving average (SMA) at $0.528. Some support may develop at the 78.6% retracement at $0.473, but the channel’s lower trend line currently at $0.402 will capture sellers’ attention and leave Stellar with a 40% decline from price at the time of writing.

Stellar has recovered over the last two days, but to invalidate the bearish outlook, XLM price needs to rally above the shooting star high at $0.780.

XLM/USD daily chart

XLM/USD daily chart

A general rebound for the crypto market may permit XLM price to extend the current rebound, raising the odds that Stellar will finally overcome the channel’s upper trend line at $0.733 and surpass the shooting star candlestick high at $0.780. 

Under this scenario, bullish investors can expect XLM price to target the 161.8% extension of the April decline at $0.981 and the psychologically important $1.00.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

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