- XLM price breakout from a symmetrical triangle continuation pattern projects further losses for the digital asset.
- Potential for the 50-week simple moving average (SMA) magnet effect to arrest the developing decline.
- Initial drop nearly registered an oversold condition on the six-hour Relative Strength Index (RSI), suggesting some bounce.
XLM price has broken the lower trend line of a symmetrical triangle pattern, making it the second triangle that has resolved to the downside over the last 21 trading days. Based on the current price structure, Stellar is positioned for further losses, potentially beyond the June 22 low.
XLM price begins the process of cleaning stops and fearful pockets
Since the June 22 low of $0.198, XLM price had been coiling in a symmetrical triangle pattern, liberating the oversold condition following the 40% drop from a previous triangle. However, it did not establish any milestones during the bounce that proposed a long-term bullish outcome for Stellar.
Fundamental to the symmetrical triangle pattern development was the role of the May 23 low of $0.274 and, more importantly, the critical 50-week SMA, currently at $0.269. Each provided some point of resistance for every intra-day pop higher during the triangle formation.
With yesterday’s breakdown from the triangle, Stellar investors should acknowledge that XRP price is vulnerable to a 34% correction from the breakout point at $0.256. The 34% measured move of the triangle forecasts a final low of $0.169. It would negate most of the 2021 gains and bust the support at the June low of $0.198 and the 78.6% Fibonacci retracement level of the March 2020-May 2021 advance at $0.191. Overall, it means a loss of 31% from the current XLM price of $0.246.
XLM/USD daily chart
It is important to note that the 200-week SMA (mean) is at $0.180, so the measured move would signify a complete reversion to the mean and a confirmed reset for XLM price. Moreover, the total decline from the May high of $0.797 would be 79%.
The weekly chart below highlights the influence of the 200-week SMA on XLM price since the beginning of 2019.
XLM/USD weekly chart
The only way XLM price can void the bearish narrative is with a daily close above the merger of the May 23 low of $0.274 with the symmetrical triangle’s upper trend line at $0.282. But, a rise above $0.282 will not mean a buying stampede will reign over Stellar as the 50-day SMA at $0.326 or the apex of the preceding symmetrical triangle at $0.343 will provide sustainable resistance.
All technical points point to a continuation of the Stellar downward move, knocking out the stops and the fearful holders that populate lower levels. Moreover, XLM price should at least test the June 22 low, but the originating symmetrical triangle pattern projects a deeper descent, possibly to the 200-week SMA. It is an outcome that seemed impossible only a couple of months ago for the blockchain project.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
US presidential election outcome could shape the future of crypto
US citizens will go to the polls to elect a new president on November 5, and their choice could be key for the future of the crypto industry and thus the price outlook for Bitcoin (BTC).
Bitcoin Price Forecast: BTC recovers as Donald Trump takes lead on polls
Bitcoin (BTC) slightly recovered to around $68,800 on Tuesday, following a shift in the United States presidential race that saw former President Donald Trump regain the lead, after US spot Bitcoin ETFs experienced an outflow of over $540 million on Monday.
Crypto markets brace for volatility in tight race between Trump and Harris
The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets.
Trump-inspired memecoin MAGA shows bullish on-chain metrics ahead of US elections
MAGA (TRUMP) trades slightly down to around $3.4 on Tuesday after rallying more than 20% since Sunday. The former President Donald Trump-based memecoin is poised for further gains as daily active addresses and network growth metrics rise, signaling increased network usage and adoption
Bitcoin: New all-time high at $78,900 looks feasible
Bitcoin price declines over 2% this week, but the bounce from a key technical level on the weekly chart signals chances of hitting a new all-time high in the short term. US spot Bitcoin ETFs posted $596 million in inflows until Thursday despite the increased profit-taking activity.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.