The Stellar (XLM) price has fallen since a long-term resistance area rejected it at the end of May.
Even though there are signs of a potential bounce developing, the majority of long- and short-term readings suggest that the trend is still bearish.
Stellar Price Fails to Sustain Breakout
Since the start of the year, the value of Stellar has been steadily increasing. In January, there was a notable breakthrough when the price moved above a descending resistance line that had been in place since its all-time high.
This kind of breakout from a long-term structure often leads to significant upward movements and indicates the end of a correction.
Afterward, the XLM price rose to the long-standing resistance level at an average price of $0.105. However, it failed to break out and instead created a bearish engulfing candlestick during the week of April 17-24.
This type of candlestick is bearish and negates the entire previous period’s decrease in the next one, which is confirmed by a close below the previous period’s opening price.
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The weekly RSI also provides a bearish reading. When evaluating market conditions, traders use the Relative Strength Index (RSI) as a momentum indicator to determine whether a market is overbought or oversold and whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls still have an advantage, but if the reading is below 50, the opposite is true. The current RSI reading is bearish and supports the continuation of the decrease.
XLM Price Prediction: Mixed RSI Signs Cause Confusion
The bearish prediction for the XLM price aligns with the technical analysis from the daily timeframe. However, the RSI provides a bullish reading that causes some confusion. The bearish signs come from the price action and wave count.
While the XLM price broke out from an ascending parallel channel on March 29, it fell below its resistance line afterward. This deviation is considered a bearish sign that often leads to future price decreases.
Moreover, the wave count shows a completed A-B-C correction, which aligns with the bearish price action. To determine the direction of a trend, technical analysts use the Elliott Wave theory.
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Which involves studying recurring long-term price patterns and investor psychology. The corrective structure and deviation both align with a bearish reading.
However, the RSI casts some doubt on the overall bearish sentiment. Even though the RSI is below 50, it has generated a bullish divergence (green line).
A bullish divergence occurs when a decrease in momentum does not accompany a price decrease. This often leads to upward movements. In this case, it could lead to an increase toward the channel’s resistance line at $0.105.
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Afterward, whether the XLM price breaks out or gets rejected will determine the future trend’s direction.
This bullish XLM price prediction will be negated if the price closes below the channel’s midline.
A decrease toward its support line at $0.080 can occur in that case.
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Disclaimer
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 ourTerms and Conditions,Privacy Policy, andDisclaimershave been updated.
As an enthusiast and expert in the field of cryptocurrency and market analysis, my in-depth knowledge allows me to provide a comprehensive understanding of the recent developments in the Stellar (XLM) market, as outlined in the provided article.
Firstly, let's address the overarching trend in the Stellar market. The article mentions that the XLM price encountered resistance at the end of May, leading to a bearish trend. My expertise enables me to explain that these long-term resistance areas can serve as critical indicators for market movements. The failure to sustain a breakout from such resistance suggests a prevailing bearish sentiment.
The article then delves into the historical context of Stellar's price movement. It highlights a breakthrough in January when the price moved above a descending resistance line, signaling a potential end to a correction. However, the subsequent failure to break out at the long-standing resistance level around $0.105 is identified as a bearish signal, particularly evidenced by a bearish engulfing candlestick pattern during the week of April 17-24.
To further support the bearish outlook, the article introduces the Relative Strength Index (RSI), a key momentum indicator. As someone well-versed in market analysis, I can confirm that an RSI reading below 50, as mentioned in the article, often indicates a bearish market. The article suggests that the RSI reading supports the continuation of the price decrease, aligning with the broader bearish trend.
However, a nuanced aspect emerges when considering the daily timeframe and the RSI's bullish reading. Technical analysis, including the evaluation of price action and wave count, reveals conflicting signals. The breakout from an ascending parallel channel on March 29, followed by a fall below the resistance line, is deemed bearish. The completion of an A-B-C correction, according to Elliott Wave theory, aligns with the bearish sentiment.
Despite these bearish indicators, the RSI introduces a degree of uncertainty by displaying a bullish divergence, where a decrease in momentum does not accompany a price decrease. This suggests the possibility of upward movements, potentially towards the channel's resistance line at $0.105.
The article concludes with a conditional bullish prediction, stating that if the price closes below the channel's midline, a decrease towards its support line at $0.080 may occur. This demonstrates a pragmatic approach to market analysis, acknowledging potential shifts in the trend based on observable price actions.
In summary, my expertise allows me to navigate the complex world of cryptocurrency analysis, considering factors such as resistance levels, candlestick patterns, RSI readings, and wave counts. The nuanced interpretation of these elements provides a comprehensive understanding of the current situation in the Stellar market.
