Stellar (XLM) Rejection from Resistance Could Kick Off a Huge Correction – News


Stellar (XLM) has been trading in a tight range since the beginning of October.

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A breakdown from this range is expected and could cause a sharp drop to follow.

XLM Trading Range

The XLM price has been increasing since it reached a local low of $0.667 on Sept 24. Shortly afterward, the price reclaimed the $0.073 area, validated it as support, and began to move upwards.

The rally ended once the price reached the 0.382 Fib level of the entire downward move at $0.087. Since getting rejected, XLM has fallen back to the $0.073 level, which is now acting as support once more.

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XLM Chart By TradingView

Technical indicators in the daily time-frame are bearish. The Stochastic Oscillator has made a bearish cross, the MACD has been rejected by the 0-line and the RSI is at risk of falling below 50.

Therefore, a breakout above the $0.087 area seems unlikely at this time.

XLM Chart By TradingView

Short-Term Movement

The short-term chart is similarly bearish. After the rejection, XLM dropped to the $0.077 area, which is seemingly acting as support, creating a potential double-bottom pattern.

However, there are no reversal signs in the form of bullish divergences. Furthermore, the RSI has fallen below 50 and the MACD is nearing negative territory, a sign that the price is likely to break down from this minor support area.

XLM Chart By TradingView

Wave Count

Cryptocurrency trader @cryptotony_ outlined an XLM chart, stating that the price might be in for an extended correction which could eventually cause the price to drop below $0.05.

Source: Twitter

Since reaching a high on Aug 17, it does seem like XLM has completed a bearish impulse (shown in black below), which is likely the A wave of an A-B-C corrective structure (white).

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The increase after the low (highlighted) does seem corrective, even if the exact wave count is not yet determined.

Therefore, it is likely that the price has begun a corrective movement that could indeed eventually take it towards $0.05.

XLM Chart By TradingView

The possibility of a correction is also supported by the weekly chart. While the price is resting at support near $0.075, the Stochastic Oscillator has made a bearish cross, the RSI is at risk of dropping below 50, and the MACD was rejected by the 0-line, all bearish signs that suggest the price will continue to move downwards.

XLM Chart By TradingView

For News’s latest Bitcoin analysis, click here!

Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of News.



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