The XLM price is leading the charge below, having broken below the covered list’s May lows for the first time.
For the first time since May 25, Stellar will close with trading volume above the 50-day average.
The digital asset has lost about 40% and 75% of its value since its May high in the last seven days.
Yesterday, the price of XLM fell by more than 20%, serving as a stark warning of the dangers of cryptocurrency investing, particularly when major support, such as the May 23 low, is suddenly eroded. Stellar bulls, on the other hand, have entered the market today, boosting the cryptocurrency from its early lows and possibly forming a doji candlestick pattern on the daily chart. Although this is a positive trend, the XLM price still has a long way to go before the nightmare is over.
The price of XLM had formed a symmetrical triangle over the previous month, with a measured move of nearly 50%. If the measured move was to be fulfilled, the downward resolution on June 16 signaled that investors should be prepared for a drop below $0.166.
By today’s low, the XLM price had dropped 40% since its June 16 low, putting Stellar near the 78.6% Fibonacci retracement of the March 2020-May 2021 rise at $0.191. The digital asset immediately overcame support at the May 23 low of $0.274 and registered the first oversold reading on the daily Relative Strength Index (RSI) since the September 2020 bottom in the process.
It was expected that the washout would occur. Stellar was predicted to be one of the first altcoins to sweep the May lows in an FXStreet piece on June 15.
Given the recent price drop, investors should be cautious while looking for a high-probability entry point into Stellar. Yes, the probable doji pattern could indicate a reversal in the price of XLM, but it could also represent a halt in a larger slide that could finally reach the measured move goal of $0.166. Nonetheless, the rise in volume beneath the doji today shows that there has been a fierce battle between sellers and buyers.
The first persuasive opportunity for investors to consider a pilot buy would be a trade above today’s high. A daily closure above the May 23 low of $0.274 would provide the further assurance needed to increase their long-term investment in Stellar. Beyond $0.274, the XLM price remains unaffected by any resistance until it reaches the symmetrical triangle apex at $0.341, resulting in a 30% return from today’s high.
Daily XLM/USD chart
The XLM price may have printed the corrective low today, but in a market of uncertainty and shifting support levels, there is still no proof. Until Stellar achieves the aforementioned points of confirmation, the token may remain dormant, honing a new level of support around $0.210 and the 78.6 percent retracement level in order to build a meaningful rally.
After the XLM price was unable to avoid a gloomy fate, Stellar is now the 19th largest cryptocurrency, with a market capitalization of $5.45 billion, sandwiched between Wrapped Bitcoin and Dai. For obstinate investors, it was a nightmare scenario.
Of course, cryptocurrency market bottoms are sometimes just a tweet away, so keeping an eye on the precise Stellar support and resistance levels will be the best method to profit from growing price structure clarity.
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