XLM price closed June 22 with a Doji candlestick pattern followed by two days of upward traction, both lacking the trade volume and impulsiveness to fracture the resistance of the May 23 low. As long as Stellar XLM remains below the May 23 low, it is dead money with the potential to test the mean.
XLM price plunged 75% from the May 16 high price of $.0797 to the June 22 low of $0.198, and a staggering 40% from the June 16 breakdown from a symmetrical triangle pattern level. The drop included an easy break of the May 23 low at a price of $0.274 and nearly pressed Stellar against the 78.6% Fibonacci retracement level of the Marcy 2020-2021 advance at $0.191 while logging the first oversold reading on the daily RSI since September 2020.
The slide in XLM price was not a complete surprise on June 15, it was projected that Stellar XLM would be one of the first altcoins to sweep the May lows, and it was.
The Stellar XLM price action since the June 22 low highlighted by the Doji candlestick pattern has not demonstrated a new sign of commitment from Stellar XLM speculators; instead, it has taken the form of a dead-cat bounce as the XLM price has modestly rebounded on lighter volume.
Unless the price regains the May 23 low on a daily closing basis, Stellar XLM is vulnerable to further weakness, maybe to the 78.6% retracement level at $0.191 or even the 200-week simple moving average at a price of $0.178. A decline to the moving average would signal a complete reversion to the mean and an additional 23% loss from the current price.
The oversold condition on the daily RSI may contain Stellar XLM price and keep any further weakness above the retracement. Nevertheless, the worst-case scenario for Stellar XLM is a test of the mean at $0.178.
A daily close above the May 23 low immediately improves the Stellar price outlook, opening the opportunity to entertain pilot buys with a higher probability of success. A successful price breakout would generate a 20% gain by the symmetrical triangle’s apex at a price of $0.340 and a 40% gain at the strategically important 200-day SMA. Stellar XLM price could even extend the rally to the current intersection of the 50-day SMA at $0.421 with the 38.2% retracement level of the May-June decline at $0.427.
If Stellar XLM market operators are impatient for a daily close above the May 23 low, they can use a pullback to the near union of the May 22 low with the 78.6% retracement level as a pilot buy opportunity.
One caveat to mention is that Stellar XLM will trigger a bearish Death Cross pattern over the next few days, adding downward pressure on the developing price structure.
After all the volatility, Stellar XLM is now the 19th largest cryptocurrency with a market capitalization of $5.44 billion, sandwiched between Wrapped Bitcoin and Dai.
Of course, bottoms in the crypto markets are sometimes only a tweet away, so being alert to the precise Stellar XLM support and resistance levels highlighted above will be the optimal approach to capitalize on emerging price structure clarity and trading opportunities.
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