Stellar Lumens (XLM) Technical Analysis: Resting Along Critical Support
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Stellar Lumens (XLM) is looking to slow down its bearish decline right now after finding a strong foothold at a critical support level. In the news recently, the Stellar network has been consistently delivering flurries of new announcements, partnerships and key developments but is sadly losing traction in the current bear market.
The new StellarX trading app was launched last week as part of the network’s universal marketplace, based on Stellar’s decentralized exchange (DEX) platform. According to the official Medium post, this new application houses some impressive new features.
“StellarX lets you live the inter-chain dream of swapping your Philippine Pesos for Litecoin for municipal bonds for lumens, and all of those trades settle in seconds...We let you trade directly from your own wallet, and you can deposit and redeem off-chain assets, like BTC or EUR. We also help you manage your secret keys, though of course we never have access to them or your assets.”
It’s free too, in fact Stellar has announced that they will,
“...pay top market-makers to ensure the closest spreads for everyone. And we also give Stellar’s automatic 1% APR inflation back to our users, keeping none of the weekly airdrops for ourselves. If you hold funds on StellarX, you will get your pro rata lumens every Tuesday.”
On top of this announcement, there is also the imminent launch of France’s first regulated ICO, Tempo, which will operate from Stellar’s DEX. This project promises to be a profound new addition to the Stellar Network.
“[Tempo is] the largest payment network of any licensed crypto exchange globally… from the Tempo mobile app or at one of its 300 agent locations, Tempo brings crypto and fiat together, for anyone, anywhere, and at anytime.”
Yet in spite of these developments XLM has failed thus far in attracting bullish support, tumbling a further -2.26% against Bitcoin (BTC) over the past 24hrs. As the bear market continues, how long can we expect this to happen?
Looking at the two XLM/BTC charts over 3hr we can see that Stellar Lumens price has finally found strong support at the 0.5 fib level/ 290 Sats mark after falling for the past 2 months against the sloping resistance line (yellow).
Over the improving BTC market last week, the asset enjoyed a brief bullish pump that was able to break above this resisting level, where it has since found reliable support.
Bearish signals still loom over the asset with a forking between the 50 and 200 EMA, and momentum showing signs of weakness on the RSI indicator. MACD is also holding below the signal line in the absence of any bullish investors and the Ichimoku indicator is also highlighting a bearish T/K crossing and resisting kumo cloud ahead of the price action.
Right now all eyes will be on this critical support level holding over the next week, with particular focus on the uncertain BTC market and the effects that is having on other altcoins.
If support can keep the asset inside the current channel depicted in the first chart (yellow area) then XLM traders may have a chance of breaking bullish from this zone. The RSI indicator on the lower chart is declining to break into the oversold region, which would represent a good opportunity for scalper traders to capitalise on the asset rebounding back into the channel.
To spot whether an asset has truly been oversold, cross referencing the RSI with the MACD and Stochastic indicators is an effective combination to use. Scalper traders usually mop up these kinds of assets when all 3 indicators are below their signal line and channel areas, and sell them quickly after the tokens have returned into the channel. Small but safe gains.
Recapping the aforementioned analysis, if XLM bulls are able to hold off the bears over this next week and launch an offensive, we would expect the asset to find resistance at 330 Sats before breaking into the smaller bullish target zone above, between here and 350 Sats.
Overall a climb from the current support at 290 to the top resistance level at 350, would deliver a return of 20.69%.
If selling pressure continues to inhibit Stellar Lumens progress, it is likely that the asset will continue to track along the 0.5 fib support into the red bearish zone below.
Inside the bearish target below we have two interior supports where XLM could recover early form, at the 275 and 255 Sats levels.
The bottom for this asset will be at 240 Sats which would deliver an overall loss of -17.24% from the current support level.