Stellar (XLM) price has been falling since it was rejected by a long-term resistance area at the end of May.
Although there are signs of a potential rebound, the majority of long and short term readings indicate that the trend is still bearish.
Stellar price failed to sustain the breakout
Since the beginning of the year, the value of the Stellar device has increased steadily. In January, there was a notable breakout when the price moved above the descending resistance line that had been in place since the all-time high.
This type of breakout from a long-term structure often leads to significant upward movements and signals the end of a correction.
After that, XLM price rose to the long-term resistance at the average price of $0.105. However, it failed to break out and instead created an engulfing bearish candlestick during the week of April 17-24.
This type of candlestick is bearish and negates the complete decline in the previous period in the next period, which is confirmed by closing below the opening price of the previous period.
The weekly RSI also provides a bearish reading. When assessing market conditions, traders use the Relative Strength Index (RSI) as a momentum indicator to determine whether the market is overbought or oversold and whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is up, the bulls still have the advantage, but if the reading is below 50, the opposite is true. The current reading of the RSI is bearish and supports the continuation of the decline.
XLM Price Prediction: Mixed RSI signals are causing confusion
The bearish forecast for XLM price is in line with the technical analysis from the daily time frame. However, the RSI provides a bullish reading that causes some confusion. Bearish signals come from price action and wave count.
While XLM price broke out of an ascending parallel channel on March 29, it fell below the resistance line after that. This divergence is a bearish sign that often leads to lower prices in the future.
Furthermore, the wave count shows a completed ABC correction, which goes along with the bearish price action. To determine the direction of a trend, technical analysts use the Elliott Wave theory.
Which includes the study of long-term recurring price patterns and investor psychology. The corrective structure and divergence are consistent with a bearish reading.
However, the RSI is casting some doubt on the overall bearish trend. Although the RSI is below 50, it has generated bullish divergence (green line).
A bullish divergence occurs when a decrease in momentum is not accompanied by a decrease in price. This often leads to upward movements. In that case, it could lead to an increase towards the channel resistance line at $0.105.
After that, whether XLM price breaks out or is rejected will determine the direction of the future trend.
This bullish XLM price prediction will be invalidated if the price closes below the center line of the channel.
A drop towards the support line at $0.080 could occur in this case.
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In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions.