Key Takeaways
Since peaking in July 2023, Stellar (XLM) has formed a symmetrical triangle, signaling the potential for a breakout or continued correction.
The next move will clarify whether the current structure supports a new bull phase or further declines.
After establishing support at $0.072 in January last year, the price of XLM started an uptrend, leading to its yearly high of $0.20 in July 2023. From this point, a long-lasting correction started with its 2024 peak of $0.16 in March.
This high-ended the second sub-wave X from the WXY pattern, and the Y developed.
On July 4, XLM landed on $0.077, which spiked to $0.11 on July 18. A symmetrical triangle formed whose apex is now being approached.
There are two scenarios ahead, depending on whether the structure from July 2023 to July 2024 ended as a WXY correction or if two more waves will prolong it.
In the bullish case, the rise since July is the first uptrend in a starting bull phase. That would make a subsequent symmetrical triangle its first bull phase correction, and a breakout to the upside would provide confirmation.
On the other hand, the recovery leading to the development of a symmetrical triangle is the second wave X in a WXYXZ corrective pattern, which will follow a rejection at the current resistance.
Another lower low would be its final wave Z, which could bring the price of XLM to $0.60 or $0.50 before it ends.
So which is more likely?
Zooming into the hourly chart, we can see that the rise since July made a five-wave advancement to the upside.
This could have been the first sub-wave in a higher-degree five-wave sequence, but a sharp decline followed, whipping out all the gains previously made on Aug. 5.
There is still a small chance that XLM will commence a bull phase, but even so, a breakout to the downside looks more likely.
Even if the structure from July 17 is corrective, we still need to see a C wave further down to the $0.77 area.
This is because the structure from Aug. 5 to Sept. 30 is most likely a three-wave correction as a B wave of the higher degree count, implying that the next move should be descending.
Whatever the case, we can conclusively say that there isn’t a bullish structure currently on the price chart, which would lead us to believe that XLM will proceed further to the upside.