Stellar (XLM) Technical Analysis: Bears Kick XLM out of Bullish Pattern

 In Altcoins

Nothing in this article is to be construed as investment advice. Neither the author nor the publication assumes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.

Stellar (XLM) remains relatively unscathed by the continuing bear market that has swept over the crypto space in the last week, dropping just 0.96% against BTC today. Other coins in the top 10 worst affected are Cardano, down 11.86 and Ethereum, down a further 10.81% at $171.

On September 10, Lightyear.io, a blockchain startup built on top of the Stellar protocol, announced a merger with Chain, a tech company that managed to raise $40 million in a funding round with the likes of Visa, Pantera Capital, Citigroup, and Nasdaq. The new merger has been rebranded ‘Interstellar’ and will make a valuable addition to the expansion of the Stellar network.

Can Stellar hold its current lead over other altcoins in the top 10, or will it cliff-edge like the rest and start sliding into double digit losses? Let’s take a look.

In the 1D XLM/BTC technical analysis on September 11, we can see that bears were able to kick the asset out of a large bullish pennant pattern that had been forming since the January crypto boom. Once XLM fell through the support of this pattern, bullish traders attempted to re-enter into the pattern, but met a new resistance at the throwback point.

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The asset is now tracking well against a downtrending resistance (red dotted line) and is heading towards the base support region (first green channel) at 2,885 Sats to 2,800 Sats, where we should see a new descending triangle pattern form.

Descending triangles are typically bearish continuation patterns, as bears continue to squash bullish uptrends down to the base support progressively more each time. Eventually the pattern reaches consolidation by which time bullish traders are too exhausted to defend the base support and it usually breaks. 

Sometimes bulls are able to use the base support to springboard from, but this takes a huge amount of effort and volume to reject these patterns. With the crypto market bleeding millions of dollars a day, it is looking doubtful that Stellar will be able to breakout out to this extent in the short-term.

There are however, some promising signals over a 2hr candle range that suggest XLM’s stability in the current falling market is attracting investors who may be seeking refuge from the double digit drops;

  • The Chaikin Money Flow indicator is arching back up towards the signal line as buying pressure increases.
  • RSI is also showing a general positive trend inside the index channel, showing early signs of rising towards the upper channel as buying momentum increases.
  • Buying volume is starting to increase as buyers flock to XLM as a safe haven.
  • Signal dots on the Parabolic SAR are lining up underneath the price action which indicates a strengthening uptrend.
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Stellar Lumens (XLM) Price Targets

All price targets are set from the 3,014 Sats mark where the asset is currently valued.

Depending on the market over the next few weeks, XLM could travel in one of two directions:

Direction 1: If buyers continue to enter into the XLM market to avoid significant losses elsewhere in the top 10 cryptocurrencies, then we could see the asset find support along the 2,885 Sats mark and oscillate sideways out of the downtrending resistance line (red dotted line). This would constitute a 4.28% loss from its current value.

Direction 2: As the market carries on declining, even XLM will struggle to slow its downtrend unless significant bullish support arrives. Assuming it doesn’t, it is likely that XLM will break bearish through the first support region at 2,885 Sats and find its next foothold at 2,800 Sats below (-7.10% overall).

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