- Stellar (XLM) shows bullish signs within a continuation pattern, possibly leading to a breakout.
- If XLM drops below the $0.12 mark, the bullish trend would be invalidated, and a bearish continuation may ensue.
Stellar (XLM) experienced a price decline since reaching its yearly high on July 13. Yet, it currently trades within a continuation pattern, hinting at a potential breakout and continued uptrend. Although the price activity and wave count suggest a sustained bullish trend, a conclusive drop below $0.12 could flip the script towards a bearish narrative.
Stellar’s Bullish Trend Amidst Resistance
When examining Stellar’s price trajectory, it’s clear that XLM breached a 616-day resistance line in early January. After a successful validation as support two months later, an upward trend resumed. Surpassing such a long-term resistance level often suggests a bullish trend reversal is underway.
The XLM price managed to break free from the $0.105 horizontal resistance zone, validating the long-term resistance line breakout. This led to a new yearly high of $0.195 in July. However, after reaching this peak, XLM faced a significant drop, resulting in a long upper wick indicating selling pressure. This suggests that the bullish force might lack the power to uphold the price surge.
The weekly Relative Strength Index (RSI), a standard tool for analyzing market momentum, reveals a positive sign. An RSI above 50 with an upward trend leans in favor of the bulls. The current RSI for XLM is rising and maintains a level above 50, marking signs of a bullish trend.
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XLM’s Potential Breakout: An Elliott Wave Analysis Perspective
The Elliott Wave analysis on the daily timeframe suggests a bullish future for XLM. Analysts employing this method study long-term price patterns and investor psychology to forecast market trends.
Based on the current Elliott Wave count, XLM appears to be in its fourth wave of a five-wave upward move. This fourth wave seems to have taken the shape of a triangle pattern, frequently seen in this phase. If this analysis is accurate, it suggests that the price has already hit a local low and may breakout from the triangle after some consolidation. The next resistance level lies at $0.23, towards which the price may move post-breakout.
However, if the price falls beneath the high of wave one at $0.12, the bullish prediction would be rendered void. In such an event, the trend could take a bearish turn, potentially pushing XLM’s price to the next support level at $0.09.
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