The stellar coin at the point of putting this article together currently sits at the number 6 spot on coinmarketcap.com, with a market cap of about 4.5 billion dollars. Just like Bitcoin and other cryptocurrencies, the XLM is in a bear market. Read on as we explain how the price action patterns point us in the direction of current and previous trends.
XLMUSD: Monthly Chart
Unlike the BTCUSD, ETHUSD, and XMRUSD analysis carried out, we observe that the XLMUSD, though it made a decline in price, the monthly chart outlook is quite stable. After the bullish price breakout that occurred November last year causing the price to make 1199% rally compared to a 100% risk (Risk: Reward ratio of 10.18), price later declined by 475.33 % in the new year.
XLMUSD: Weekly Chart
Looking at the above weekly chart, you’ll agree with me that it lends more clarity than the monthly chart considering that the price action patterns are more pronounced. Starting from the bullish accumulation pattern that contributed towards pushing the price higher by 716.08% with a risk exposure of 85.80%. Bearish accumulation patterns triggered on January 15 established a strong resistance level at 0.7305. Price continued to oscillate downward from deep bearish and bullish swings, and as the swings move towards the 65 Period moving average making lower highs, we start to see a shrinking in the range of the swing.
The MACD (9, 21, and 5) at the moment oscillates below the zero level, forming a potential bearish hidden divergence pattern when compared to the price pattern that currently trades above the 65-period moving average. A bearish dead cross of the MACD oscillator will confirm this move.
XLMUSD: Daily Chart
Moving closer into more recent times, and starting from the confluence of events that’s made up from the bullish regular divergence and breakout of bearish accumulation pattern shoots price by 50.93% compared to a risk of 11.3%. Bearish accumulation patterns formed on September 25 and 29 end the bullish run and a failure to break above the accumulation resistance 0.263 and 0.259 indicates a bearish swing leading to a price correction of about 13.4%. Right now, the pair continues to oscillate downward as price breaks below a bullish accumulation pattern on the 24th of October.
XLMUSD: 4-HOUR Chart
If you’ve been following our technical analysis, you’ll notice that a breakdown of bullish accumulation similar to the one triggered on October 21 often leads to the start of a major bearish trend, as shown above. Taking a short sell trade from this time horizon offers less risk exposure and a higher potential take profit target.
Still making reference to the above chart, a bearish hidden divergence pattern is building up and a bearish accumulation pattern is already formed. With this in view, we wait for the dead cross to confirm the divergence pattern.
XLMUSD: 2-HOUR Chart
The 2 major patterns we’ll concentrate on here are the bearish accumulation patterns triggered on the 29th of October and the more recent one on November 1. The bearish breakdown pattern that followed the bearish divergence pattern presents an opportunity to scale in an additional trade. The second divergence pattern on the other hand could not stand the test of time as the pattern failed to a series of bearish accumulation breakouts.
Conclusion and Projection
Below is an update to XLMUSD technical analysis showing the failure of the bearish hidden divergence pattern discussed earlier from a 4-hour and 2-hour timeframe. The breakout of bearish accumulation on both time frames caused a 9.4 increase in the exchange rate with a risk of 2.0% %( Risk: Reward = 3.6). From a longer timeframe point of view, we still look forward to a bearish divergence on the weekly chart, however, since we do not yet have a dead cross of the MACD to confirm this or a price pattern, we’ll go in the direction of the lower time frames.
XLMUSD: 4-HOUR Chart Update
XLMUSD: 2-HOUR Chart Update
See our blogs for further crypto technical analysis and fundamental analysis.
Check out our most recent Technical Analysis of Stellar (XLM) in April 2019.