Stellar Lumens (XLM) Technical Analysis: Potential Reverse Head & Shoulders Pattern on 1D Chart

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Latest Stellar Lumens News

The Stellar Foundation has released the latest monthly roundup today which outlines all of the project’s recent achievements and endeavours over the last 4 weeks.

The main developments from the past month include:

  • Stellar becoming the largest Coinbase Earn partner, giving away up 1 Billion XLM tokens on the San Fracisco-based platform.
  • Coinbase Pro adding support for XLM.
  • The launch of IBM’s World Wire cross-border payment solution which has been built on top of the Stellar blockchain.
  • Smartlands, Stellar’s first ICO, has recently launched its first STO this month which allows investors to purchase tokens backed by a new student building in Nottingham, England.
  • The Zion Wallet on the new HTC Exodus blockchain phone has recently added support for XLM. 

Today, XLM is one of the best performing cryptocurrencies in the top 10 against the US dollar, with a 2.36% gain.

Stellar Lumens Price Analysis

On the 1D XLM/USD chart we can see that the asset has almost completed a large inverse head and shoulders (H&S) pattern, that began way back on December 5, 2018.

Typically inverse H&S patterns are very bullish patterns that breakout once the right shoulder has retracted back to the neckline (red area).

Right now we can see that the right shoulder is just starting to form after ricocheting off the neckline resistance ($0.13) on April 7.

In order for this pattern to continue, we should now expect to see XLM continue bearish all the way down to the shoulder line which sits around the $0.096 mark, before spiking back up towards the $0.13 level.

The shoulder line at $0.096 (grey dashed line), has been a very key level for XLM in the past, and has acted as both a strong support and resistance for the asset.
Because of this, it’s likely that if the price action does return on to this level it could provide bullish traders with a strong platform to launch an upside recovery from.

Should buyers succeed in retracing back to the neckline after touching the $0.096 mark, then the pattern will complete and a strong bull run should ensue.

Looking at a number of momentum indicators over 1D candles, we can see that a bearish continuation is looking possible over the short-term which could help complete the right shoulder.

  • The RSI has fallen from the overbought region at 70%, all the way down to the midway point at 50%, as increased selling momentum steers the asset downward.
  • On the MACD indicator, the 12MA has bearishly diverged with the 26MA is continuing to plummet down towards the signal line. This also confirms that momentum currently sides with bearish traders.
  • The CMF line is also plummeting towards the zero line, as selling pressure begins to mount up.

Stellar Lumens (XLM) Price Targets

All ROIs are calculated from the neckline at $0.135, assuming that the right shoulder continues to form in the aforementioned manner.

PT1: 0.5 Fibonacci Level/ $0.169 (25.19%)

PT2: 0.618 Fibonacci Level/ $0.192 (42.22%)

PT3: 0.786 FIbonacci Level/ $0.224 (65.93%)

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