Sheldon McIntyre, CMT
Independent Analyst
- XLM price is contained inside the daily Keltner Bands and Bollinger Bands.
- Stellar faces one critical resistance level before a retest of the all-time high.
- A significant contraction in daily volume supports a price squeeze.
XLM price advance from mid-November 2020 to the February 13 high of $0.6083 was framed by three impulsive waves of 200%, 270%, and 170%, yielding an overall gain of 670%. Another bullish impulse of this nature could see Stellar rise to new yearly highs.
XLM price squeeze creates energy for a big rally
For the last twenty trading days, XLM price has been locked in a sideways pattern while respecting the Keltner Bands’ midline. The result of the tight price action is the emergence of a squeeze pattern.
A squeeze pattern is when the Bollinger Bands (BB) contract inside the Keltner Bands (KB) on any chart duration, and it is often a prelude to a sharp move in either direction.
Take note. The correction in December 2020 was just over 50%, and the retracement in January was just over 50%. Guess what? The decline into late February was almost 50%.
If symmetry holds, XLM price has already printed the low, and the current squeeze pattern has a higher probability of resolving to the upside than the downside.
To confirm the new rally, Stellar needs to clear the resistance defined by the upper Keltner Band and the upper Bollinger Band around $0.444. A successful breakout will lift the price to the all-time high at $0.6083 in quick fashion.
Additional profit targets are the 1.382 retracement level at $0.718, which is 60% from the squeeze pattern, and then the 1.618 retracement level at $0.787.
XLM/USD daily chart
Essential support for the bullish outlook comes in at $0.373. A failure to hold above this price point would be followed by a decline to the February 23 low at $0.314 and potentially to the 100-day simple moving average (SMA) at $0.309.
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