After last week’s selloff, the Stellar price has established a new trading range, with support at $0.26 and resistance at $0.30. However, the technicals are pointing to a breakout, which, if proved true, could lead to a period of explosive price action.
Although stellar Lumens (XLM) is up 120% since the start of the year, its performance is relatively disappointing, especially considering that by January 6th, XLM was +240% year-to-date. At last count, the Stellar price is 35% below its January 6th high and almost 67% the May multi-year high of $0.7978. Unfortunately, Stellar is also one of the few cryptos not to set a record price this year. For XLM, that came during the cryptocurrency bubble in 2018 when the price reached $0.9309 in January, just before the bubble popped.
XLM Underperforms in 2021
Like in 2018, after reaching a high in May this year, the price action has been almost one-way traffic lower. However, the Stellar price did show promise earlier in the month when it closed above the 200-day moving average for the first time since June, reaching a four-month high of $0.4317, before dumping 20% the following day. Since then, the price action has been frustrating for the bulls. XLM has limped lower over the last three weeks, but $0.26 has been a good support level so far.
XLM Technical Analysis
The four-hour chart shows the importance of the $0.26 and $0.30 levels. Despite the weakness last week, XLM has bounced from $0.2600 three times. Therefore, I consider $0.2600 the first significant support level. Notably, the chart shows that the Stellar price has formed a double-bottom, reinforcing the validity of the support. Should Stellar close below this threshold, it will likely witness further selling, targeting the July low of $0.20.
Above the market, the former horizontal support at $0.305 is joined by a descending trend line from the September high, at $0.2850 to form robust confluent resistance. Only if Stellar climbs above $0.3050 will the bulls breathe a sigh of relief. Until such a time, the downside looks favourable. However, above $0.3050 and an argument can be made for XLM to extend towards $0.40.
Stellar Price Chart (Daily)
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