Trade Recommendation: Stellar Lumens
We’ve been watching Stellar Lumens (XLM/BTC) ever since it revisited an area just below the range low of 0.0000295 on December 15, 2018. At that point, we were curious about whether the market will respect the support. Fortunately, it did. The ability of the bulls to defend 0.0000295 generated a rally to as high as 0.00003393 on December 24, 2018.
While we were not taking advantage of this rally, there was no reason to let the fear of missing out take over. We expected Stellar Lumens to pullback and retest support of 0.0000295 again. That’s because markets need to build a strong base before they can ascend. So far, Stellar Lumens appears to be following the script.
Technical analysis shows that XLM/BTC seems to be creating a double bottom pattern on the daily chart. The fact that Stellar Lumens is trading around 0.0000295 for about three weeks tells us that the smart money is accumulating positions. A new base is being established, which will be instrumental in the market’s climb to our target.
In addition, we can see a bullish divergence on the daily chart. The price is trading above 0.0000295 just as it did on December 16, 2018. However, the RSI has climbed from 22 on December 16 to 39 on January 5, 2019. This indicates that bulls are gathering momentum around the support.
The strategy is to buy as close to 0.0000295 as possible. As long as Stellar Lumens stays above this level, it will likely climb to our target of 0.00003711.
The process may take more than a month.
Daily Chart of Stellar Lumens/Bitcoin on Binance
As of this writing, the Stellar Lumens/Bitcoin pair is trading at 0.00003057 on Binance.
Summary of Strategy
Buy: As close to 0.0000295 as possible.
Disclaimer: The writer 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.