Stellar (XLM) Price Slips After 200% Rally to New Yearly High — Signs of Weakness Emerging

Key Takeaways

• Breakout Confirmation: End of wave (2) marked by a breakout above $0.13.
• Wave (3) Peak: Hit 1.618 Fibonacci extension at $0.275, signaling strength.
• Consolidation Phase: Wave (4) forming with support at $0.20 and resistance near $0.23.

Stellar (XLM) recently surged 200% to $0.27, the new yearly high. This resulted from breaking out of a prolonged consolidation near $0.10 and confirming a bullish trend.

The rally completed wave 3 at the 1.618 Fibonacci extension, signaling strong momentum, with a potential wave 4 consolidations underway.

XLM Price Analysis

The price of XLM on the daily chart shows a remarkable breakout from a prolonged corrective structure, resulting in a 200% parabolic rise to $0.27 on Nov. 20.

This bullish rally follows a multi-month consolidation phase characterized by a WXY corrective wave structure with a solid base near $0.10. 

However, the breakout above the descending resistance trendline confirmed the end of wave 2 and initiated a strong impulsive wave 3, now peaking near the 1.618 Fibonacci extension level at $0.275.

The Relative Strength Index (RSI) has entered the overbought territory, signaling the potential for a short-term correction. XLM is starting a consolidation phase, likely forming wave 4 of its larger impulsive structure before continuing to wave 5. 

Key Observations

1. Breakout Confirmation: The breakout above $0.13 confirmed the end of wave (2) and the start of a new bullish phase.
2. Wave (3) Peak: Wave (3) reached the 1.618 Fibonacci extension, signaling strong bullish momentum.
3. Consolidation Phase: XLM is consolidating, potentially forming wave (4), with support at $0.20 and resistance near $0.23.

XLM Price Prediction

The 1-hour chart for XLM shows a developing impulsive structure, currently completing wave 3 within a rising wedge pattern.

The price action is maintaining higher highs and higher lows, which aligns with continuing the bullish trend.

Additionally, the recent bounce from the wedge’s support near $0.23 suggests wave 5 of the lower degree count could be underway, targeting a higher local peak near $0.28.

The RSI is neutral, indicating balanced momentum, with no immediate signs of overbought conditions. The hourly chart shows that the momentum has slowed since Nov. 16. 

Despite the slowing momentum, the overall trend is still bullish and has one more push to the upside, judging from today’s ascending support bounce.

However, should this change and we see a breakout to the downside, we can anticipate the beginning of the higher degree wave 4 seen on the daily chart. 

Key Levels to Watch

• Support Levels:
  • $0.23: Rising wedge support.
• Resistance Levels:
  • $0.27: Rising wedge upper boundary and wave (3) peak.
  • $0.28: 1.272 Fibonacci extension, likely wave (5) target.
  • $0.30: Psychological resistance and next significant Fibonacci level.

A confirmed breakout above $0.27 would validate wave (5), signaling further bullish momentum toward $0.30.

Conversely, a breakdown below $0.23 could invalidate the current wave count and lead to a deeper retracement.

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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