The XLM price is building up for a breakout. Will this time Stellar Lumens finally launch to the upside, or is more pain ahead for the bulls?
Stellar is trading close to unchanged early Tuesday and last at $0.2387, higher by $0.0004 (+0.18%).
The XLM price has been devoid of any excitement of late, having spent most of the last 3 weeks jammed in a tight range between $0.2200 and $0.30000. Although, the bias has certainly been to the downside, and for the majority of that time, Stellar Lumens has been below $0.2500.
Stellar’s 7-day, 6.85% decline sees it ranked as the 18th largest cryptocurrency with a $5.56 billion market cap. Although, when I started writing this, it was the 19th, behind Theta Coin. However, this is not to be taken as a positive for XLM as it results from THETA’s accelerating losses.
With Stellar grinding sideways, a triangle formation has been created on the daily chart. Furthermore, the price is now approaching the end of the pattern, indicating a breakout is on the horizon. This has the potential to act as an adrenaline shot to the lifeless Stellar Lumens price. All that remains is to see in which direction the breakout tales XLM.
The daily chart highlights a strong level of horizontal support at $0.2270. Notably, XLM has not closed below this price since the 5th of January, so it should be considered a significant support level.
If XLM loses this support, the price to watch is $0.1150, around 46% below the current level.
Additionally, a descending trendline at $0.2469, from the end of June, defines the top end of the recent range. This is, therefore, the first line of resistance.
Until Stellar can clear this restrictive trend line, it raises the chances of a break on the downside. Having said that, should XLM advance beyond $0.2469, the 50-day moving average at $0.3139 becomes a logical target.
In conclusion, I see one of two scenarios coming to fruition in the foreseeable future.
The XLM price could either be 46% lower or 30% higher, depending on which trend is first to fail. Although given the current weakness and lack of interest in the cryptocurrency market, the downside looks favourable.
However, I, for one, will be hoping to be proved wrong.
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