The price of XLM continues to fall, but it is still contained within the confines of a declining channel.
A strong six-hour Relative Strength Index (RSI) with positive momentum divergence, implying a bounce from the June 26 low of $0.228 is credible support, supporting the channel’s midline.
While trading in a declining channel since June 30, the price of XLM generated a wider symmetrical triangle formation on July 7. The longer-term picture remains bearish for the time being, but there is signs that Stellar is on the verge of a minor rebound on intra-day charts, which might test the channel’s upper trendline or perhaps the 50 six-hour simple moving average (SMA).
The price of XLM decisively broke out of a symmetrical triangle formation on July 7, marking the second such pattern to trigger since June 11. Following the breakthrough, Stellar registered an oversold reading on the six-hour RSI, but the price rebound was limited and halted around the upper trend line of the descending channel, bringing the focus back to the downside.
Today, the XLM price is finding support at the $0.228 low from June 26, which is also the channel’s midline at $0.229. The bullish momentum divergence on the six-hour RSI, together with the constructive response to the June 26 low and the channel’s midline, suggests an intra-day bounce in the coming hours.
If the XLM price rises, resistance will be found at the channel’s upper trend line at $0.246 and the 50 six-hour SMA at $0.252. It would be a slight pause in the Stellar drop, but it would provide an opportunity for agile day-traders to enter new short bets.
6-hour chart of XLM/USD
As previously indicated, the long-term forecast for XLM remains bearish, with the symmetrical triangle pattern indicating a 34 percent drop from the breakout and an ultimate low of $0.171. It would wipe out most of Stellar’s gains in 2021 and break support around $0.198, the 78.6 percent Fibonacci retracement level of the March 2020-May 2021 advance, and $0.191, the 78.6 percent Fibonacci retracement level of the March 2020-May 2021 advance.
Daily XLM/USD chart
A daily close over $0.252 would be the first indicator that the downtrend is finished, and the XLM price is poised to test the symmetrical triangle’s apex at $0.278, implying a 20% gain from current levels.
Beyond the pinnacle, the 50-day SMA around $0.313 will test any Stellar strength.
The six-hour chart does show a potential for a comeback, but the wider price structure continues to suggest lower prices in the future.
FXStreet’s analysts assess where Stellar might go next, as it appears destined for fresh highs./n
