Stellar Price Analysis: After Brutal Selling the Bulls are Back, For Now
- XLM/USD bulls have managed to stage a rebound with the daily closure on 27th.
- Should this latest foundation of a recovery been capitalized on, then there is potential for XLM/USD to fly.
Recovery Mode On
XLM/USD has over the last two sessions managed to regather some bullish momentum. This came after five consecutive sessions in the red, as part of a larger bearish trend. The price within the mentioned period had dropped a chunky 35%. Even more notable is that XLM/USD has dropped over 50% since 12th November. Given the daily closure on 27th November, it appears that sellers have run exhausted, for now. The price managed to close in the green, for the first time in five days. Therefore, a recovery mode could be well under way, but there are some big barriers.
It could be foreseen that the selling pressure was losing steam, given XLM/USD attempting to form a bottom over the past three days. The buyers had been strongly defending the $0.1350 area, between the 25th to 27th November. This was demonstrating signs of exhaustion, given the intensity of downside that has been observed of late. It isn’t too surprising to see a change in trend now, after observing the RSI via the daily. The RSI had run firmly into negative territory, dropping to around 24, before the bounce coming into play on 27th November.
Taking into consideration the recent bottoming, bulls must now focus on the barriers that lie ahead. Firstly, there was a demand area that had been serving as firm support for XLM/USD. This had been in play from June up to November. The market bears had forced a breakout given the high intensity at the time of the move lower. Due to the shear length of time the zone had been active, it wouldn’t be surprising to see this acting as a new stubborn area of resistance. This will be the first necessary barrier to break down. It is seen tracking from $0.1700-$0.1900 range.
Looking further north, should a breakout of the mentioned area be seen, expect a larger wave of buyers return to XLM/USD. As a result, the bulls will likely breakdown the $0.2000 area. This is where the lower trend line of the breached pennant pattern is seen to be tracking. Furthermore, such moves could then see the price flying back towards the $0.3000 mark. There isn’t much in the way of barriers until this point. XLM/USD last traded in proximity to this level on 12th November, just before the bears kicked in.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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