Stellar Lumen Struggles Below Resistance — Will Downtrend Persist?
Key Takeaways
- Price is struggling below its significant resistance.
- An uptrend was seen in previous months.
- Price was rejected at the horizontal resistance.
- It needs to start increasing immediately to maintain a bullish outlook.
From its July high of $0.18, Stellar Lumen (XLM) price has been on a decline trend and is now being traded at $0.12, which represents a 34%decrease. Its July high was another interaction with the most significant horizontal resistance zone between $0.23 and $0.17.
This zone has proven to be highly significant in the past and, when the price traded below it in the previous cycle, it formed an U-shaped accumulation zone. After that, it finally made another runup in November 2020.
A similar pattern occurred between May 2022 and now, with July’s interaction resulting in a retest that ended as a rejection, now leading to a negative trend. Could this downward movement establish a stronger support and function as a necessary liquidity grab before a breakout?
XLM Price Analysis
In our previous XLM analysis, we pointed out the completion of the uptrend from June 16.
At that time (July 20), we stated that a breakout wasn’t likely.
“So can the price enter the resistance territory and finally break it? It does not look possible at the moment, at least not in this wave. More likely, we are going to see a rejection that is going to set up the price for a higher-degree retracement before making another attempt.”
Looking at the current chart, we can see that this is exactly what happened and the price retraced to its 0.618 Fibonacci level at $0.11. It occurred in a three-wave manner, which can be labeled as an ABC correction, at least for now.
This means that, from August 18, when we have seen the start of some positive price action, a new impulsive and positive wave may have started. It is still in a downtrend as there were no higher highs.
At the moment, the price is at a higher low compared to August 18 level but this needs to be established further by the second runup that is going to surpass the previous high on August 20, when the price was $0.13.
If it does so, the likelihood of the starting uptrend would be much higher and could mean that the price has started to gain momentum to finally break above $0.22.
Alternatively, if it continues moving down, below $0.11, this possibility would be much lower.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
