Stellar Lumens (XLM) price spiked against a long-term support area but is showing no bullish reversal signs.
Since hitting an all-time high of $0.798 in May 2021, XLM price has traded below a descending resistance line. This decline led to a November 2022 low at $0.079. It intensified during the week of November 7-13, even though there was no direct negative XLM news prior to this. The lower lows and the ensuing bounce validated the $0.085 horizontal area as support (green icon).
Despite the rally, the weekly RSI remains bearish. It is trading below 50 and has not generated any bearish divergence.
Therefore, in the absence of a conclusive signal, whether XLM price breaks out of the resistance line or breaks the $0.085 support area will likely determine the XLM price prediction.
XLM price analysis headed towards new year lows
Technical analysis on the daily time frame shows that XLM broke above a short-term horizontal channel on 8 November. It hit a new yearly low of $0.082 the next day.
Later, it bounced but was rejected by the support line of the channel (red icon). Hence, the line is now expected to provide resistance.
Similar to the weekly time frame, the daily RSI is trading below 50 and is yet to generate a bullish divergence. As a result, both the daily and weekly time frames offer a bearish outlook for future prices.
Wave Count Shows Bottom Is In
Even though the weekly and daily time frames are bearish, the wave count shows that the bottom has come.
Since the all-time high, XLM price may have completed an ABC corrective formation (black). The sub-wave count is given in red, indicating that XLM has completed wave five.
Waves A:C 1:1.61 ratio gives a price target near $0.075, which coincides with the current lower and long-term horizontal support area.
Due to the mixed readings from the price action and wave count, whether XLM price breaks the $0.085 support area or bounces will determine the future trend direction.
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