- XLM price trades on a different tune as it seeks to keep price above the lower trendline of a symmetrical triangle.
- 200-Day Stellar Simple Moving Average (SMA) has a huge impact on any possible price movement.
- The volume is well below the 50-day average and shows no accumulation or distribution by investors.
The XLM price was supported by the lower trend line of the symmetrical triangle and the 61.8% Fibonacci retracement level of the March 2020-May 2021 rally. The resulting recovery, however, has been limited, unaffected by the surge in Bitcoin since El Salvador’s announcement that it would make BTC legal tender. Without a daily close above the 200-day SMA at USD 0.379, the price path of the cryptocurrency will trend downwards.
Bitcoin’s XLM price decoupling follows the altcoin script
The May XLM price correction was a nasty reminder of the risks associated with cryptocurrency investing as Stellar slumped 65% to the May 23rd low. Not only did it remove fear and weak owners, but the decline also eliminated a historic rally from the March 2020 low.
The ongoing price action has taken the form of a symmetrical triangle, as the XLM price oscillates in a narrower range with a volume that is well below average. Stellar’s current position below the 200-day SMA and the upper trendline of the triangle that was just crossed below the moving average are challenging bullish Stellar investors.
The measured movement of the symmetrical triangle is almost 50%. A downside resolution could motivate an XLM price decline to $ 0.166, well below the 78.6% retracement of the March 2020 to May 2021 rise. It would be a severe blow to Stellar; a network that aims to promote financial inclusion by reaching out to people without a bank account.
To confirm a downside resolution, XLM price needs a daily close below the June 12th low of $ 0.300. It would almost guarantee a swing below the May 23rd low of $ 0.274 and increase the chances that Stellar will continue its brutal correction, possibly to its measured move target of $ 0.166.
XLM / USD daily chart
XLM price can avoid bearish fate by starting with a daily close above the upper trendline of the triangle and the dominant 200-day SMA, which is currently $ 0.379. Thereafter, Stellar could rebound at the intersection of the 38.2% retracement of the May correction at $ 0.474 with the falling 50-day SMA at $ 0.486. So it would be a 30% gain for timely Stellar investors.
Like other altcoins, XLM is struggling to break the boundaries of a symmetrical triangle and the resistance of the 200-day SMA. As a result, the outlook for Stellar isn’t much different either, neutral with a bearish dip.