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XLM price penetrates trendline in possible bear trap, but Stellar will recover

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  • Stellar price is testing the green ascending trend line that acted as backbone for the uptrend since the beginning of October.
  • XLM price looks to be making a false breakout, a bear trap, that could see large buy-side volume resulting in a bullish recovery and breakout.
  • Expect a quick break above $0.41 towards $0.46.

Since the beginning of October, the Stellar (XLM) price has been in an uptrend, with a well-defined green ascending trend line acting as the backbone. This trend line is being broken today, in what looks like a bear trap. This should result in bulls quickly using the opportunity to overhaul bears and make a breakout trade up to $0.46. As bulls finally have broken out of the bandwidth since mid-June, expect more upside potential to follow.

XLM price to recover as uptick in volume washes out any bearishness

A break to the downside looks to be unfolding, but with global market sentiment still in check and favorable tailwinds still present, this instead looks like a bear trap ready to offer bulls an entry for a recovery move followed by a future break out from the consolidation.

XLM price should see volume on the buy-side pick up throughout the day and wash out any bearishness that could put the uptrend under pressure. Expect a massive uptick in buy-volume and then a breakout to unfold towards $0.46. XLM price will likely be rejected at first but will find support at $0.41, where new buyers will come in and push XLM price up for another leg towards $0.51.

XLM/USD daily chart

XLM/USD daily chart

The bull-trap thesis would only be invalidated if bears can push price action below the $0.35 low of October 21, in which case  expect a pickup in selling volume with a nosedive in XLM price action as a result. Although bears face the 55-day Simple Moving Average (SMA) and the monthly pivot around $0.33, expect selling to continue until $0.30. With the double barrier at $0.30 and $0.29, however, bears will face quite some resistance from bulls that will want to keep the uptrend in place.

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XLM price forms bottom reversal pattern, targets $0.40

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  • XLM price looks ready for a move higher as it bounces off the $0.35 support level for the third time.
  • The triple tap setup suggests a move to $0.40 in a conservative scenario and $0.42 in an optimistic outlook.
  • A breakdown of the range low at $0.32 will invalidate the bullish thesis.

XLM price has dropped sharply after failing to slice through a crucial resistance level on the daily time frame. The recent drop is the last piece needed to complete a bottom reversal pattern, suggesting investors can expect Stellar to make a comeback.

XLM price to make a comeback

XLM price failed to break above the $0.42 barrier three times over the past month. The recent failure on November 10 led to a 20% downswing and created a swing low at $0.35, which is the third consecutive low since October 30.

The 4-hour price chart is now showing that the remittance token has formed a triple tap setup, also known as a bottom reversal technical formation. Market participants can now expect XLM price to reverse and make a run to the immediate barriers.

The 50% retracement level at $0.37 is the first hurdle Stellar will encounter on the way up. Clearing this level will push it toward $0.40, constituting a 13% advance. In a very bullish case, the upswing could overextend towards $0.42.

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While further gains are possible, the short-term bullish outlook is capped at $0.45. Investors should expect a decent correction after XLM price retests $0.42 or $0.45.

Another scenario that traders should expect is a retest of the demand zone, ranging from $0.33 to $0.34 before the reversal occurs.

XLM/USDT 4-hour chart

XLM/USDT 4-hour chart

While things are looking up for XLM price, a breakdown of the said demand zone at $0.33  will create a lower low and invalidate the bullish thesis. In this situation, Stellar will likely revisit the range low at $0.30.

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XLM price at a critical juncture amid impending golden cross

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  • XLM/USD challenges critical daily support line, a rebound on the cards?
  • A Forexsuggest study cites Stellar as the most environmentally-friendly cryptocurrency 
  • RSI stays bullish while a golden cross could be in the offing.

Stellar Lumens (XLM/USD) maintains its bearish momentum starting out a fresh week on Sunday, although hovers within Friday’s trading range between $0.40-$0.36.

In doing so, XLM price is posing a 1.50% loss to trade at $0.3730, awaiting a strong catalyst for the next big move.

Stellar price could receive the much-needed impetus from a research study conducted by Forexsuggest, which reveals that the most environmentally-friendly cryptocurrency is Stellar, a competitor to Ripple that requires just 0.00003KWh per transaction, which is barely a third of what IOTA requires.

Stellar needs 0.00072 oz of CO2 per transaction, which is almost nothing when compared to Bitcoin’s 1,060.5 lbs per transaction.

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How is XLM price positioned on the technical graph?

Looking at Stellar Lumen’s daily chart, XLM price has been testing the bullish commitments at the horizontal 21-Daily Moving Average (DMA) over the past week.

This Sunday, the 21-DMA coincides with the rising trendline support, connecting the higher lows since October 27. That powerful line of defense awaits at $0.3710.

A daily closing below the latter will offer extra zest to XLM bears, as they would look to extend the recent downtrend towards the horizontal 200-DMA at $0.3568. The upward-sloping 50-DMA closes in on that point.

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Further south, the mildly bullish 100-DMA at $0.3455 will come into play.

XLM/USD: Daily chart

However, with the 50-DMA looking to cross the 200-DMA for the upside, XLM buyers are weighing in their chances, at the moment.

If the above materializes on a daily closing basis, then a golden cross will be confirmed, flashing a strong bullish signal.

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A rebound towards the five-month highs of $0.4436 cannot be ruled out. Ahead of that the $0.40 psychological magnate could impede the road to recovery.

The 14-day Relative Strength Index (RSI) points south but still trends above the central line, adding credence to the bullish potential.

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XLM buyers frustrated as Stellar fizzles out

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  • XLM price faces another rejection against the $0.41 value area.
  • Despite multiple bullish attempts to break out above $0.41, sellers slap XLM lower.
  • Hidden bullish development on the Point and Figure chart may destroy short sellers.

XLM price has been a frustrating instrument for any long-term investor or short-term speculator. It’s hard to believe and even harder to remember, but XLM has not made a new all-time high since 2018! Psychologically, bulls have been trolled throughout October – but the joke may soon be on the bears.

XLM price action may play a trick on the bears this Halloween, bringing treats for the bulls

XLM price may trick any bears that believe XLM is ready for another bearish breakdown lower. While the candlestick chart and Ichimoku system show continued rejection higher, the $0.01/3-box Reversal Point and Figure chart shows a sort of hidden bullish setup that isn’t seen on a candlestick chart.

The red diagonal line on the Point and Figure chart below is the previous bear market trendline. Quick note: In Point and Figure charts and analysis, an instrument is always in a bull market or bear market. That bear market trendline was broken when the most recent X-column broke above it at $0.41. However, bears then took over and pushed XLM lower to create a double bottom and then a sell entry one box below at $0.32 – but that’s where XLM price stopped.

XLM/USD $0.01/3-box Reversal Point and Figure Chart

Because XLM price broke the bear trend angle, the market has converted into a bull market. The hypothetical long trade setup is a buy stop at the 3-box reversal ($0.36 at the time of publishing) with a 4-box stop loss and an optional 3-box trailing stop. The projected profit target from that entry is $0.55.

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The current long setup can only be invalidated if a new low below $0.20 develops in the current O-column.

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