Stellar (XLM) bounces significantly before being rejected by long-term resistance

Despite a strong rally in early 2021, the Stellar (XLM) price is yet to cross the long-term resistance area at $ 0.42.

Due to the lack of clarity on both the technical indicators and the number of waves, it remains unclear whether XLM has completed its correction and will now resume its upward momentum or will hit another low in the short term.

Long-term durability

XLM has been growing rapidly since the beginning of the year. In January alone, it hit highs near $ 0.45 twice. However, it failed to close the week above the 0.382 Fib resistance at $ 0.42.

If this is successful, the closest areas of resistance will be the $ 0.54 and $ 0.66 levels, which are the 0.5 and 0.618 fib retracement levels of the downward move, measured from the price level, and the highest of all time, respectively.

The technical indicators in the weekly timeframe are bullish and support the upward move.

The daily chart is showing mixed signals and it is uncertain whether XLM will break the long-term resistance area at $ 0.42.

On the downside, it has created many long top wicks, a sign of selling pressure. Additionally, the MACD, RSI and Stochastic Oscillator appear to have lost momentum.

However, the RSI is still above 50 and the MACD above zero, indicating an uptrend. Additionally, XLM rallied in the USD 0.24 support area several times.

So the next trend is still unclear. However, the possibility of a bullish continuation remains high as long as it trades above $ 0.24.

Count waves

Trader TheTradingHubb sketched an XLM chart indicating that wave 5 of a bullish impulse has begun and is likely to rise to $ 0.055.

At this point in time, some waves are still valid. While the uptrend presented in the tweet is certainly valid, it is possible that the entire bullish impulse was an incipient crossover and XLM is currently correcting within wave 2 (shown in white below).

This and the ambiguity of the technical indicators give little information about the direction of the trend. The number of partial waves is shown in orange.

If XLM completes this bearish wave, it will likely retest the $ 0.24 support and drop to $ 0.21, the 0.5 fib retracement level of the entire bullish move.

XLM / BTC

Similar to the USD pair, the weekly indicators for the XLM / BTC pair are bullish and support the continuation of the uptrend.

However, XLM has been facing resistance in the 1,100 satoshis zone since December 2020 and the trend will not rise until that area bounces back.

When that happens, the next resistance will be at 2,000 satoshis, the 0.382 Fib retracement level from the recent downward move.

Conclude

It remains unclear whether XLM has completed its correction or will hit another low point in the near future. While the technical indicators are bullish, both XLM / USD and XLM / BTC will need to cross their respective resistance areas to confirm an uptrend.

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

SN_Nour

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