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XLM is poised for another leg downward, but buyers can benefit here

26 Oct, 20222 min readAnalytics
XLM is poised for another leg downward, but buyers can benefit here

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

  • A chart pattern for Stellar shows a drop to $0.1 could commence soon
  • Market structure and momentum have also been in favor of the sellers recently
  • Stellar saw an abrupt rejection at the $0.13 resistance level and has shed 15% of its value since then. The formation of a bearish chart pattern, combined with the higher timeframe market structure, suggested more losses could follow.

    Here’s AMBCrypto’s Price Prediction for Stellar [XLM] in 2022-23

    Short traders can look for a breakout beneath this pattern to further solidify their conviction. A retest of the short-term support level, in the event of a southward move, can be used to sell XLM.

    Range formation and triangle pattern suggest XLM could head toward $0.1 again

    Just over two weeks ago, a retest of the range highs saw XLM face a stiff rejection. It was unable to hold on to the short-term support level at $0.125 and plummeted 12% in two days.

    The past two weeks saw XLM form a descending triangle pattern (white). Some support was seen at $0.108. Owing to the bearish momentum in recent weeks, it was quite likely that this pattern would see a move downward.

    The RSI has stayed below neutral 50 to add credibility to this idea. However, it did not reach overbought nor oversold territory in recent months, which showed the range formation. The OBV also fell beneath a support level from earlier this month.

    The Fibonacci retracement levels (yellow) showed that a move above $0.112 could invalidate the bearish idea laid out above. Meanwhile, the 23.6% extension level at $0.101 was close to the range lows and can be used to take profit.

    A move below the $0.125 mark and its subsequent retest can be used to enter a short position.

    Flat OI within the pattern and negative funding rate show seller strength

    At press time, the funding rate showed that short positions paid longs and that futures market participants remained bearish.

    Development activity has been good in recent months, although the past two weeks did not see heavy activity.

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