Stellar’s (XLM) price is currently crashing below the $0.38 support area.
A confirmed breakdown will be an extremely bearish development for XLM.
Can the XLM price regain its footing and reclaim its critical support area?
Stellar (XLM) faces one of its most critical moments this year as the price breaks below multiple support levels.
Technical indicators and price action point to growing bearish momentum, raising concerns of a deeper decline.
Still, a potential Elliott Wave setup offers a chance for a bullish reversal, but the window for the bulls to take action is closing fast.
Stellar Price Analysis
The weekly time frame technical analysis shows that the XLM price has been under diagonal resistance since its all-time high of $0.80 in May 2021.
While the XLM price has made several breakout attempts, they have all been unsuccessful (red icons).
The most recent happened in July, catalyzing a 30% price decline that is still ongoing.
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The inability to break out is concerning, but the bigger warning sign is the drop below the $0.39 horizontal support.
While the price traded above this level, especially after forming a bullish engulfing candlestick in August (green icon), the breakout chances looked promising.
However, last week’s decline has worsened the chances of that outlook, raising the risk of a pullback toward the $0.31 support.
Stellar’s bearish signs are not exclusive to the price action. Momentum indicators show that the trend has lost momentum and bears are gradually taking over.
The Relative Strength Index (RSI) has fallen below 50 while the Moving Average Convergence/Divergence (MACD) has almost made a bearish cross.
As a result, the long-term XLM prediction is bearish unless the price reclaims the $0.39 area, which seems unlikely based on the weekly chart alone.
Why is XLM Going Down?
In the daily chart, the XLM price has lost the minor support at $0.36 today, further worsening its outlook.
This breakdown also formed a lower low, and when combined with August’s lower high, it signals that bears have fully seized control of the trend.
XLM’s indicators reinforce the bearish prediction. The RSI fell below 50 while the MACD is declining, deep into negative territory.
Unless the XLM price reclaims the level today, the future trend remains bearish, and more downside is likely.
Should the decline continue, the next major support lies near $0.32, created by a horizontal zone and the lower boundary of a descending parallel channel.
Bullish Alternatives
The wave count provides the only bullish alternative, mapping out a possible A-B-C correction for XLM.
The wave count aligns with Elliott Wave rules in the short and long term.
In the short term, XLM may have completed an A-B-C corrective pattern (red), with wave C measuring 0.618 times the length of wave A.
This structure also falls within a descending wedge, adding confluence to the potential for bullish price action.
In the long-term, the XLM price could be finishing wave four in a five-wave upward movement (green).
So, despite the overwhelming bearish signs, the wave count is a saving grace for the bulls, but the XLM price needs to break out from the wedge today for it to remain valid.
Tough Road Ahead
Overall, Stellar’s outlook remains firmly bearish unless the price can bounce significantly in the short-term.
With RSI and MACD flashing strong downside signals, another leg down toward $0.32 could occur.
However, a surprising bullish reversal would still be possible if XLM broke out of its descending wedge.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
