Stellar Lumens Price Analysis: One More Pullback Before Big Bull Action?

  • XLM/USD is observing a pullback after the recent bull run, gaining over 25%.
  • The small near-term correction could be the big incentive for bulls to really pile in to send XLM/USD to the north.

Stellar’s native token Lumens has been making solid ground for its larger path to recovery. XLM/USD was contained within a triangular pattern formation since July. It proved to be very stubborn indeed. Given the crafting of this pattern coming after a deep market fall, it could have been perceived to be a bearish pennant. The bulls however defying this with the breakout observed.

On 31st October, XLM/USD saw a daily candlestick closure with a hammer, indicating of a reversal, following the firm trend lower it had previously exhibited. Playing by the textbook with that candlestick, the price has since been running to the upside. Between the 31st October and 5th November, the price gained around 25%.

Pullback in Play

XLM/USD daily chart

Resistance was encountered between the 50% and 61.8% Fibonacci. Sellers pilling in after the 6th November high print, $0.2725. This was the highest level that had been seen since 24th September, where the price hit and was rejected by the upper trend line of the triangular pattern. XLM/USD was forced to treat at the time, back down towards the lower supporting trend line.

Given the decent breakout to the upside from the above-mentioned pattern, collating big gains within a short time frame, the pullback isn’t too surprising. Typically, after such moves are observed, the pullback or profit taking is usually followed. In this current case, XLM/USD is heading for the retest of the pattern, following the breach.

Near-Term Technical Road Map

Should the market bears complete the pullback, this would see XLM/USD back south around $0.2350, in proximity to the 38.2% Fibonacci. A failure to hold and complete this technical set up could see the price easily slipping back down to the $0.2000 territory. The bottom seen between 11-15 October could be a likely initially destination.

To the upside, post a potential bounce, the bulls would need to break down $0.2600 (50% Fibonacci) and then $0.2830 (61.8% Fibonacci). These are the only major barriers in the way of $0.3000 being reclaimed. The price last traded here on 23rd September, which was very much short-lived, as the sellers pilled in.

In conclusion, this pullback which appears to be very much underway, could further trigger some larger bullish momentum to come. A firm clearance of the big psychological $0.3000 mark can open up the door to greater upside. $0.3540 the high print seen on 25th July, may come back into the picture in the near-term.

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.

Featured image courtesy of Shutterstock.

Ken has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.