Hi friends hope you are doing well and welcome to the new update on Stellar. As after hitting the resistance of channel the XLM has dropped more than 24%. Therefore in today's article we will try to understand what the price action can do next.
Bearish Shark pattern has done its job:
In my previous article I revelaed that the price action of XLM has formed bearish Shark pattern on weekly chart and it was expected that the price action will be moved down from here. After heating the potential reversal zone of this pattern now finally the price action has dropped and it has been retraced between 0.382 to 0.50 Fibonacci level.
Up channel and synchronization of price action with indicators:
Now if we switch to the daily chart. Then XLM has formed an up channel like every top cryptocurrency including Bitcoin. The movement of the price action within this channel was very much synchronized with stochastic, MACD and Momentum indicators. Whenever the price action reaches at the supported the stochastic gives bull cross and MACD and momentum indicators turn bullish. The price action follows the signals of these indicators and moves up and hits the resistance of the channel. We have witnessed this move in the month of April and then in the month of May 2020. Recently the priceline again moved at the support of this channel and stochastic and MACD both turned bullish together but so far the momentum indicator is strong bearish. Therefore the price action finally has broken down the support of the channel. And after breaking down the channel the stochastic has given bear cross again.
Support and resistance levels:
We can watch the different support and resistance levels on 2 day time period chart. After March 2020 first the price action broke out the $0.045. Ater breaking out Stellar retested the previous resistance as a support and moved towords next resistance of $0.06. And after breaking out the this resistance level the price action again re-tested this resistance as support and moved up to the next resistance level of $0.08. The $0.08 is one of the most strongest resistance level for the price action of XLM. And this time the price action is again not able to break out this resistance level and after being rejected it is moving back towards the previous resistance of $0.06 to re-test it as support.
A bullish reversal harmonic move:
If we switch back to the daily chart then it can be easily seen that after breaking down the channel price action has completed the formation of a bullish BAT pattern. This is a bullish reversal pattern therefore there is a possibility that the price action will take the bullish divergence from the potential reversal zone that is defined as per Fibonacci sequence of harmonic bullish BAT. But this potential reversal zone should be set as a stop loss. Because once this PRZ level will be broken down then the price action can move more down to complete the final leg of bullish Crab pattern.
Conclusion:
Even though all indicators are turning bearish and the channel support also has been broken down but there is a possibility that the price action will be reversed bullish as it has completed a harmonic bullish move.
Bearish Shark pattern has done its job:
In my previous article I revelaed that the price action of XLM has formed bearish Shark pattern on weekly chart and it was expected that the price action will be moved down from here. After heating the potential reversal zone of this pattern now finally the price action has dropped and it has been retraced between 0.382 to 0.50 Fibonacci level.
Up channel and synchronization of price action with indicators:
Now if we switch to the daily chart. Then XLM has formed an up channel like every top cryptocurrency including Bitcoin. The movement of the price action within this channel was very much synchronized with stochastic, MACD and Momentum indicators. Whenever the price action reaches at the supported the stochastic gives bull cross and MACD and momentum indicators turn bullish. The price action follows the signals of these indicators and moves up and hits the resistance of the channel. We have witnessed this move in the month of April and then in the month of May 2020. Recently the priceline again moved at the support of this channel and stochastic and MACD both turned bullish together but so far the momentum indicator is strong bearish. Therefore the price action finally has broken down the support of the channel. And after breaking down the channel the stochastic has given bear cross again.
Support and resistance levels:
We can watch the different support and resistance levels on 2 day time period chart. After March 2020 first the price action broke out the $0.045. Ater breaking out Stellar retested the previous resistance as a support and moved towords next resistance of $0.06. And after breaking out the this resistance level the price action again re-tested this resistance as support and moved up to the next resistance level of $0.08. The $0.08 is one of the most strongest resistance level for the price action of XLM. And this time the price action is again not able to break out this resistance level and after being rejected it is moving back towards the previous resistance of $0.06 to re-test it as support.
A bullish reversal harmonic move:
If we switch back to the daily chart then it can be easily seen that after breaking down the channel price action has completed the formation of a bullish BAT pattern. This is a bullish reversal pattern therefore there is a possibility that the price action will take the bullish divergence from the potential reversal zone that is defined as per Fibonacci sequence of harmonic bullish BAT. But this potential reversal zone should be set as a stop loss. Because once this PRZ level will be broken down then the price action can move more down to complete the final leg of bullish Crab pattern.
Conclusion:
Even though all indicators are turning bearish and the channel support also has been broken down but there is a possibility that the price action will be reversed bullish as it has completed a harmonic bullish move.
