Swarm Intelligence Set

Stellar (XLM): The Crypto Winter Is Not Over Yet

December 12, 2020   Stellar

The Stellar project is known for having a strong team of developers and well-elaborated token economics. However, the unprecedented success of DeFi, the foundation of which lies in the Ethereum blockchain, Stellar’s rival, left the outside developers uninterested in a technology that is often accused of being overly centralized. That’s the reason why the project has been struggling recently with the adoption of its protocol, which, in turn, had a negative effect on the coin’s fundamental value, hence its price on the market. 

The bear market continues for XLM

It would suffice to look at Stellar’s performance profile from the past year to understand that XLM hasn’t even got a chance to get out of the bear market. In the USD market, the 17th cryptocurrency went green only by 10.23%, while struggling against Bitcoin (BTC) and Ethereum (ETH).

Over a year, XLM went down by 25% against BTC and slid by as many as 48% in the ETH market. This comes to show that Stellar could be one of the worst among top altcoins to have in the portfolio for an extended period of time because its value continues to decrease across the board. 

1-month XLM/USDT chart

We’ll start the XLM price prediction with the analysis of the situation on the monthly time frame, where the presence of the downtrend that lingers from 2018 is apparent. Stellar has once again failed to test the previous lower high, stopping 27% short of the close of the monthly candle at the peak of the 2019 high.

It remains locked inside the descending channel after being rejected at $0.1, which led to the emergence of the evening star pattern that signals a bearish reversal. So far, the buyers are defending the support at $0.063. Stochastic indicates that the momentum is on the sellers’ side. Should it get broken to the downside, a strong sell must follow.

Key price levels on this time frame:

  • $0.074 - the acting support;
  • $0.063 - breaking to the downside will lead to a sizable price drop.

1-week XLM/USDT chart

Moving on to the weekly time frame. Here we see that the price action is in the process of finalizing the head and shoulder pattern, thus further confirming the bearish reversal that will entail a severe price depreciation. XLM is likely to go for the retest of support at $0.069, then bounce back to $0.08 only to crash to $0.06 and lower. Stochastic is close to the oversold zone, supporting the prediction of a potential rebound. 

Key price levels:

  • $0.069 - a potential entry point for a quick upswing play;
  • $0.08 - price target area after successful retest;
  • $0.062 - stop-loss.

1-day XLM/USDT chart  

The action on the daily time frame demonstrates that Stellar has been very respectful of the diagonal support that merely confirms its importance for the trend structure, as well as the choice of stop-loss position. Here the Stochastic has already dived in the overbought waters - it’s likely to find support at 10, at which point traders could prepare to make an entry once the indicator reverses.

Once the reversal is confirmed, set the price target at $0.08 or use the trailing stop-loss approach. The key price levels here align with the ones of the higher time frame. 

Author: Alex Paulson for Crypto-Rating.com

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