Stellar Price Analysis: XLM/USD Breakout and Retest of Descending Channel Formation
- Stellar Lumens (XLM) has been cooling over the past two sessions, potentially making room for another run higher.
- XLM/USD bulls did force a breakout and now a retest has been observed from a descending channel formation.
The XLM/USD bulls have been forced to take a back seat over the past two sessions. This is following a very strong run higher, which was seen from 16th right up to the 24th December. The price managed to gain a whopping 53% over this period, from $0.09500 up to $0.147500. It isn’t too surprising that a cooling is being observed for XLM/USD, given the very fast and explosive run of late. The market is in a completely different place in comparison to 2017, there are more technical areas in play.
Descending Channel Set-up
At the very start of November, when the downside trend picked up some pace, XLM/USD began to form a descending channel pattern. It was moving in a steep fashion south, having dropped as much as 67% within the confinements of this. On the 23rd December, the bulls finally managed to breach resistance, firmly pushing and closing above. Given the mentioned easing in bullish momentum, the price has retested the channel. This development is playing to the textbook so far, with the breakout and retest.
The crucial upper trend line of the pattern is currently at the time of writing being used as support. This should be noted at $0.117000, a breach by the bears will likely ignite further hard selling pressure. Attention will once again switch back to the recent bottom area, which formed on the 15th December at $0.093500. Any further move south of this, will then likely see a test of the channel’s lower supporting trend line.
Keeping in mind the technical set up that is in play, if the support holds, a greater wave of upside is still eyed. Looking to the north, the next area of interest will likely be a strong prior demand zone. This can be seen tracking from $0.177000 up to $0.210000, it had provided support from June up until the end of November. Due to the sheer length of time it acted as a buying area, it wouldn’t be surprising if this causes some problems for the bulls.
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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