Stellar (XLM) Faces 30% Decline After Parabolic Surge, Downtrend May Continue

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By Nikola Lazic

Edited by Ryan James

XLM decreases 30% after reaching a new yearly high, revisiting its prior cycle peak. Will it crash further?

Key Takeaways

XLM surged 644% since Nov. 4, marking a parabolic breakout.
The $0.45-$0.48 range serves as key support and resistance.
Overbought RSI suggests possible retracement to lower Fibonacci levels.

Stellar (XLM) has seen a remarkable 644% rally, breaking out of a prolonged corrective phase and surging to a peak of $0.64 on Nov. 24.

While momentum remains strong, overbought Relative Strength Index (RSI) levels and a parabolic rise indicate the potential for consolidation or retracement, with the $0.45-$0.48 zone acting as a critical pivot area.

XLM Price Analysis

The daily chart of XLM showcases a significant bullish breakout, marking the end of a prolonged WXY corrective structure.

The price has surged from a critical support level near $0.10, breaking out of the descending trendline and reaching a new yearly high of $0.64 on Nov. 24 at its wick, but the daily candle closed below 3.618 Fibonacci extension at $0.56.

The RSI is overbought, reflecting strong momentum but suggesting potential for short-term consolidation. We saw a 30% downturn to a low of $0.44 a region, aligning with previous horizontal resistance from late 2021.

This horizontal resistance zone between $0.45 and $0.48 remains pivotal, as it aligns with historical highs and could act as a barrier to further upward movement.

XLM price analysis — XLMUSD parabolic runup is over | Credit: Nikola Lazic/TradingView

Considering the price increase was parabolic, amounting to a 644% gain since Nov. 4, a price could come crashing down next.

Key Observations

Parabolic rise: The breakout above the descending trendline and the $0.30 resistance caused a parabolic runup
Critical Pivot Zone: The $0.45-$0.48 zone is a key area to watch, as it aligns with both Fibonacci extensions and previous historical resistance.
Overbought RSI: While bullish, the RSI suggests potential short-term consolidation or retracement before continuation.

The ability of XLM to sustain above the $0.30-$0.34 range will be critical to confirming the breakout’s validity.

A decisive move above $0.48 could pave the way for a rally toward $0.56 and beyond, while failure to hold support may result in a pullback toward the $0.24-$0.21 zone for accumulation.

XLM Price Prediction

The hourly chart for XLM indicates the potential conclusion of a five-wave impulsive structure to its recent peak of $0.64.

The price is currently consolidating and at horizontal support. Forming a descending triangle signals a likely corrective phase, with the price testing the $0.45 horizontal support, aligning with the 0.618 Fibonacci extension.

XLM price prediction — XLMUSD descending flat triangle breakout will signal more downside | Credit: Nikola Lazic/TradingView

The RSI has begun to trend downward, suggesting waning bullish momentum and the possibility of further downside. A breakdown from the triangle could initiate a deeper retracement toward lower Fibonacci levels, potentially completing a larger wave correction.

Conversely, a breakout above the descending resistance would invalidate the bearish scenario and indicate a continuation of the uptrend.

The hourly RSI, close to the oversold zone, could show a short-term bounce. Still, a rejection at the descending resistance would be anticipated, resulting in a decisive breakout below the $0.44 area.

In that case, we can see more downside to the 1 or 1.618 Fib extension level.

Key Levels to Watch

Support Levels:

$0.42 (0.786 Fibonacci level): Immediate support within the corrective triangle.
$0.37 (1.0 Fibonacci level): Major support aligning with previous breakout levels.
$0.24 (1.618 Fibonacci level): Key accumulation zone if deeper retracement occurs.

Resistance Levels:

$0.47: Descending triangle resistance and key breakout level.
$0.54 (0.236 Fibonacci extension): Short-term target if bullish momentum resumes.
$0.58 (0.618 Fibonacci extension): Mid-term resistance, aligning with the extended wave projection.

XLM’s ability to hold above $0.42 will maintain bullish sentiment. A break below this level could lead to a test of $0.37, signaling further consolidation before potential recovery.

On the upside, a breakout above $0.47 would confirm a continuation toward $0.54 and beyond, validating the next impulsive wave higher.

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.

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About the Author

Nikola Lazic

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. Expertise: Cryptocurrencies, Technical analysis, Elliott Wave Theory, On-chain metrics, Research reports.

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