The breakout direction from consolidation pattern will provide further insight into the next primary trend direction.
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Key Takeaways
Breakout Confirmation: XLM surged from a descending wedge, peaking at $0.70.
Support Resilience: Immediate support at $0.42, deeper support at $0.35.
RSI Cooling: Momentum is easing, signaling possible consolidation or correction.
Stellar (XLM) recently broke out of a long-term descending wedge, signaling a bullish trend reversal.
After reaching a new yearly high of nearly $0.70 on a parabolic runup, the price has entered a consolidation phase near key horizontal levels, suggesting further recovery or deeper correction.
Stellar (XLM) recently broke out from a long-term descending wedge, signaling a bullish reversal. This breakout was supported by strong momentum, leading to a massive rally that peaked near $0.70.
The impulsive wave structure highlights wave (v) completion, followed by a corrective phase.
Following its peak, XLM retraced and tested the breakout zone as support, currently consolidating near $0.42. It fell to a low of $0.35 on Dec. 9 but quickly snapped back, closing the day at $0.41.
XMLUSD at key horizontal level | Credit: Nikola Lazic/TradingView
This also happened the following day, signaling that the price had encountered buying pressure.
The Relative Strength Index (RSI) indicates a cooling phase, suggesting potential for further consolidation before a decisive move.
The current price action suggests a possible continuation higher if key supports hold, targeting the $0.55 and $0.70 resistance levels.
However, failure to maintain support could lead to a deeper retracement toward $0.35 or $0.30, testing the bullish structure’s resilience.
Key Observations
Breakout Confirmation: XLM exited a long-term wedge, peaking at $0.70.
Support Zone: Immediate support at $0.42 and deeper at $0.35.
RSI Cooling: Momentum has eased, indicating potential consolidation or a correction.
XLM Price Prediction
The hourly chart reveals that XLM is currently in a corrective phase following its impulsive rally to $0.64. It formed a descending triangle pattern indicative of consolidation.
The corrective structure shows a clear ABC formation, with wave (c) recently hitting $0.36.
The RSI indicates recovering momentum from oversold levels after the price rebounded to $0.44 yesterday, Dec. 10.
XLMUSD descending triangle formed | Credit: Nikola Lazic/TradingView
The price hovers around the $0.42 support zone, showing an early attempt at breaking out of the descending triangle.
However, resistance near $0.47, coinciding with the triangle’s upper boundary, is capping bullish advances.
A decisive move above this level is needed to confirm the resumption of the uptrend.
Further downside risk remains if the $0.42 level fails to hold, with the next critical support near $0.38.
Alternatively, if bullish momentum strengthens, XLM could target the $0.55 resistance zone and potentially revisit its previous highs.
Key Levels to Watch
Support Levels:
$0.42: Immediate support within the descending triangle.
$0.38: Next key support in case of a breakdown.
$0.35: Deeper support aligning with prior consolidation levels.
Resistance Levels:
$0.47: Triangle boundary and immediate resistance.
$0.55: Potential breakout target if the bullish move materializes.
$0.70: Previous high and significant psychological resistance.
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.
Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis.
Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information.
