Stellar Bounces With The Market — Not So Impressed (XLM)

Hi friends! Welcome to this update analysis on Stellar! Looking at the four hour chart, we can see that a breakdown has occurred, from the head and shoulders pattern. The dip didn't quite reach the bottom of the ascending broadening wedge, but it was very close. Across the crypt space, I see a very similar theme today. A rapid selloff occurred, which sent prices tumbling. Then, practically all of the cryptocurrencies that I follow, bounced hard, on high volume, with with a strong bullish shift on their respective MACDs, and each one has formed a bull flag. Looking at XLM here, we can see that the bull flag peaked, and found resistance at the neckline of the head and shoulders pattern. The bull flag suggests that we are likely to break to the upside, and retest the neckline resistance. I've got to say, I like the bullish reaction, and I definitely expected it, as prices approached the bottom of the wedge. However, a small bounce into a bull flag doesn't erase the severe damage that has been done. The bulls have their work cut out for them, if they want to regain control of this market. Looking at the MACD, you can see that it is trying to form a bullish crossover, but that hasn't actually happened yet. In order for that to happen, we'll need this bull flag to breakout to the upside. Although the bounce is nice to see, I've got to be real with you. There is a massive amount of overhead resistance, and not much downside supprot. On the upside, we've got the 618, which XLM is all over at the moment, then the head and shoulders neckline, then the 50 EMA (in orange,) the 200 EMA (in purple,) and the 50% retrace. Below us, we have the bottom of the wedge, and then the 786. Clearly, the path of least resistance is still down. As I'm writing this, the current candle is trying to breakdown from the bull flag. Be very careful here. If the flag breaks down, the bottom of the wedge will be tested, and probably broken. This market is very weak, and there isn't much follow through on this bounce. On the contrary, this could be a longer-term low. We have to watch what happens with this flag to know for sure. A breakout, which takes us above the head and shoulders neckline, would be a very bullish sign. However, a breakdown from the flag, which appears to be happening as I write this, will be a very negative sign. Be on guard! A test of the bottom of the wedge, and a subsequent breakdown may be imminent. If you recall from my previous posts, I've been saying that the ascending broadening wedge pattern is a bearish pattern that normally produces a breakdown. We may see that very soon.


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***This information is not a recommendation to buy or sell. It is to be used for educational purposes only.***

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