Timing A Bottom With Stellar (Part 2) - When Breakout?
It's time for an update on one of the worst performing cryptocurrencies from 2019! How about that downtrend, eh? XLM has over twenty (20!!!) weekly touches on this downtrend since the peak in early 2018. That means, in the last 100 weeks, XLM has spent about 20% of the time testing this downtrend on the weekly. That's both impressive and depressing. The trend is extremely powerful and calculated.
HOWEVER, there is a reason why this time *might* be different. For one thing, XLM hasn't even attempted to test the bottom of the long term bearish channel since nearly a year ago. This might be a hint of seller exhaustion, while buyers very slowly take control. For another, the weekly stoch is showing a lot of potential upside if it happens to break out here. Clearly, there's no real point in assuming a bull market for XLM until it closes above the 200w MA, which has just recently formed around 10 cents. But this analysis is not really about trading in the short term. It's about potentially catching a long term bottom for Stellar Lumens.
In my last post, I tried to call the bottom around $0.053. As if in direct response, XLM exploded up all the way towards 9 cents immediately after my analysis. Unfortunately, it ended up being a devastating fakeout. The beautifully forming "fulcrum bottom" failed miserably, and XLM fell to a new low, in the low 4 cents zone. However, this low was bought up, and XLM is now back up against the downtrend, and rather quickly as well. It's also well above the previous broken support at 5 cents. On the daily, we just briefly broke the downtrend again, but got rejected at the 200d MA:
If we're going by historical precedent, XLM should fall apart again at the downtrend and head to new lows, along with many other alts. But...this time, Bitcoin dominance is very close to breaking down from the uptrend it's held for 2 years.
This means that this may be the start of a positive correlation between Bitcoin price and altcoin dominance. To me, this is a healthier crypto market, because it means new participants could be entering, rather than the same old money just flowing around between Bitcoin and alts. This would make sense, given that the stock market has been rallying hard, which makes investors more likely to gamble on "risky" and speculative assets like cryptocurrencies. XLM has the advantage of being on Coinbase (even in New York, finally), and it has been around now for 6 years. It's also one of the fastest and cheapest coins out there. Being open-source, developers can build on top of the network, bringing more value and diversity to the ecosystem. I've also always liked Stellar because they willingly give out their coins to facilitate adoption. While this may cause some sell pressure, it increases decentralization over time. Being one of the most usable cryptocurrencies for everyday transactions helps. Eventually, XLM is one of those cryptos that I hope to use while traveling.
This is not financial advice. This is for speculation, education, and entertainment only.
-Victor Cobra
HOWEVER, there is a reason why this time *might* be different. For one thing, XLM hasn't even attempted to test the bottom of the long term bearish channel since nearly a year ago. This might be a hint of seller exhaustion, while buyers very slowly take control. For another, the weekly stoch is showing a lot of potential upside if it happens to break out here. Clearly, there's no real point in assuming a bull market for XLM until it closes above the 200w MA, which has just recently formed around 10 cents. But this analysis is not really about trading in the short term. It's about potentially catching a long term bottom for Stellar Lumens.
In my last post, I tried to call the bottom around $0.053. As if in direct response, XLM exploded up all the way towards 9 cents immediately after my analysis. Unfortunately, it ended up being a devastating fakeout. The beautifully forming "fulcrum bottom" failed miserably, and XLM fell to a new low, in the low 4 cents zone. However, this low was bought up, and XLM is now back up against the downtrend, and rather quickly as well. It's also well above the previous broken support at 5 cents. On the daily, we just briefly broke the downtrend again, but got rejected at the 200d MA:
If we're going by historical precedent, XLM should fall apart again at the downtrend and head to new lows, along with many other alts. But...this time, Bitcoin dominance is very close to breaking down from the uptrend it's held for 2 years.
This means that this may be the start of a positive correlation between Bitcoin price and altcoin dominance. To me, this is a healthier crypto market, because it means new participants could be entering, rather than the same old money just flowing around between Bitcoin and alts. This would make sense, given that the stock market has been rallying hard, which makes investors more likely to gamble on "risky" and speculative assets like cryptocurrencies. XLM has the advantage of being on Coinbase (even in New York, finally), and it has been around now for 6 years. It's also one of the fastest and cheapest coins out there. Being open-source, developers can build on top of the network, bringing more value and diversity to the ecosystem. I've also always liked Stellar because they willingly give out their coins to facilitate adoption. While this may cause some sell pressure, it increases decentralization over time. Being one of the most usable cryptocurrencies for everyday transactions helps. Eventually, XLM is one of those cryptos that I hope to use while traveling.
This is not financial advice. This is for speculation, education, and entertainment only.
-Victor Cobra
Comment:
Forgot to add, this was the original analysis where I first tried to call the bottom around 5 cents:
Comment:
A pullback was expected here, but if XLM can close the day above the 100 MA (green), that would be somewhat encouraging.
Comment:
What really needs to happen is a daily close ABOVE the 200d MA (blue). Until that happens, XLM is in a strong bearish trend.
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XLM has yet again failed to break out (surprise)! As I said, until it closes above the 200d MA, it's not wise to enter a short term position. XLM will need to hold the horizontal levels near 5 cents and 4 cents to have any hope. Otherwise, it could head straight into the 2 cents area. The good news for alts is Bitcoin dominance looks fairly weak, and TOTAL2 looks stronger than Bitcoin, for now. I also want to see XLM close today above the 100d MA (green). It's not far from current levels.
Comment:
Alright XLM, now that you're above the 200d MA and the downtrend, are you going to blueball everyone once more? Or can you shoot straight up to $0.16?
Comment:
This is actually the strongest XLM has looked upon a break of this downtrend. It has plenty of room to correct here as well, if the market decides to take a breather...but we might be gearing up for the first major wave up for altcoins to fully exit their bear market.
Comment:
Plenty of room for consolidation now we're out of that ridiculous downtrend, hopefully once and for all. I'd like to see us break above that 50w MA and cause a bullish cross to occur. That would be the next steps for XLM.
Comment:
TradingView has done something to the long term XLM chart here, so I can't really post updates using the same chart anymore....but it's comforting to see that this analysis has played out in favor of the bulls so far. XLM has been consolidating around 10 cents for a while, and seems to be preparing for a big move up towards 16 cents, as long as the market keeps on trending upwards.
Comment:
If the weekly closes here, we can see an aggressive move to the upside, once the 9W EMA crosses above the 100.
