- Stellar’s price bounces off crucial support at $0.20 to start a significant recovery.
- XLM’s V-shaped recovery could boost the price to $0.24.
- Stellar must overcome the resistance at the 50 SMA to sustain the uptrend.
From July 12, Stellar price started a downtrend that saw it shed around 12% of its price by July 14. On same day, XLM started a V-shaped recovery which we correctly predicted that it would rally to $0.25. This prediction was validated when Stellar price reached a high of $0.257 on July 16.
However, the international remittances token has since recorded lower lows in a downward trend towards the $0.20 psychological level. Bouncing off this crucial level, Stellar appears to making a significant recover. Will history repeat itself?
Stellar Nurtures Another V-shapes Recovery to $0.24
A V-shaped recovery occurs when an asset experiences a massive price decline and then makes a sustained uptrend. For example, XLM currently teeters at $0.22 amid the push by bulls for highs beyond $0.24. If this pattern holds, we expect the Stellar price to rise suddenly before running into significant resistance at $0.25.
Note that most of the previous bullish crypto signals from the same candlestick pattern were confirmed in the previous attempts to recover. This indicates that Stellar price may remain bullish as buyers target areas beyond $0.25.
From a technical viewpoint, the Moving Average Convergence Divergence (MACD) indicator validated the bullish outlook. This happened when 12-day Exponential Moving Average (EMA) crossed above the 26-day EMA. Note that the bullish momentum will be sustained when MACD crosses above the zero line into the positive region.
For now, bulls should aim at overcoming the 50-day SMA ($0.228) resistance. If this happens, the bulls will be bolstered to push towards $0.25 and perhaps make a go at $0.3.
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Stellar Price (XLM/USD) four-hour chart
Looking Over the Fence
On the downside, the XML’s upward rally appears to have been stopped at $0.22 with the flashing of a bearish pin bar candle on the same four-hour chart. This shows that the recovery attempts are being cancelled out by the bears as accentuated by the Relative Strength Index (RSI) based on its horizontal movement along the midline.
Realise that four-hour candlestick closure below the $0.22 psychological level may result in another bearish run. A move below this level would see the Stellar price re-test the support at $0.2 and the June 22 low at $0.198.
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