Stacks Price Breaks Out After Bullish Divergences – Next STX Target at $3
Will the Stacks Bullish Divergences Lead to June Increase? | Credit: Hameem Sarwar
Key Takeaways
- Stacks has fallen nearly 40% since its all-time high price on April 1.
- STX broke out from a descending wedge pattern on June 4.
- What do Stacks’ bullish divergences mean, and what will their impact be in June?
The STX price has traded close to $2 for the past month but broke down from a confluence of support levels in April. Despite this breakdown, the RSI and MACD gave a positive signal and STX reclaimed the lost support before breaking out from a bullish pattern.
The Stacks price has seen three similar bullish divergences in the past two years, all resulting in notable upward trends. Will this pattern repeat, or will this signal diverge from the historical trend?
Stacks Price Breaks Out, Completes Correction
The STX price has corrected since its all-time high price on April 1. The decrease likely took the shape of an A-B-C corrective structure (white), where wave C developed into an ending diagonal (black), as evidenced by the wedge shape.
After a bullish divergence that developed for over a month (green) in both the RSI and MACD, STX finally broke out on June 4, reaching a high of $2.45 two days later.
If the upward movement continues, the next resistance is at $3.06, created by the 0.618 Fibonacci retracement resistance level. If STX clears it, it can move toward its all-time high price.
Stacks Generates Bullish Divergences
The daily time frame chart shows the STX price has fallen under a descending resistance trend line since its all-time high of April 1. The decrease culminated with a low of $1.80 on May 31. During this time, STX fell below the $2 horizontal area, which had provided support since the beginning of May and resistance before that.
Despite the breakdown, the Stacks price started an upward movement today, on June 3. A bullish divergence in the MACD and RSI has also been developing. This is a signal that often leads to a bullish trend reversal.
Since STX is positioned below the $2 resistance area and the descending resistance trend line, a potential increase resulting from the divergence can trigger a reclaim of both these levels. If this were to happen, it will confirm the breakdown is invalid and the trend is still bullish.
In this case, the Stacks price could increase considerably in June, with the next target being the 0.618 Fibonacci retracement resistance level at $3.07.
Similar bullish divergences have triggered upward movements thrice in the past two years. The largest was a 550% price increase in the beginning of 2023. The wave count can help confirm if a similar movement will transpire in June 2024.
Has the Stacks Price Completed its Correction?
The six-hour time frame Stacks price analysis hints at an upcoming upward movement in June. This is because the STX wave count shows a completed an A-B-C corrective structure (white).
Wave C developed into an ending diagonal, as noted by the sub-wave count (black) and the shape of a descending wedge. Ending diagonals are often followed by sharp movements in the other direction. So, the current iteration perfectly aligns with the bullish divergences.
If STX breaks out, it will likely increase to the 0.618 Fibonacci retracement resistance level of $3.07. Since the correction is complete, it is possible the price will increase to a new all-time high. If that happens, the next resistance will be at $5.10.
Stacks Set up for June Gains
The Stacks price has generated bullish divergences, similar to those that led to upward movements between 80 and 500% in the last two years. The wave count also indicates the correction is complete. Since STX broke out from its descending wedge, it can increase by at least 28% to the 0.618 Fibonacci retracement resistance level at $3.07 and possibly even move to a new all-time high.
