July 7, 2018
Stellar (XLM) is continuing to play out as expected technically. As mentioned last week, fundamentals and a price of an asset class rarely move in tandem. We saw a slew of positive news this week, namely the IBM-Australian government deal and the launch of StellarX. All of this adds to the case of a return to all-time highs.
However, we should remain patient as the overall crypto market dictates the pace of price movements. As a result, since the start of the year, technicals have become much more important than fundamentals. Larger players are still in the accumulation phase with the incentive to wait for prices to continue lower based on what the charts say. These players will not be interested in re-entering until there are certain triggers more generally across the crypto market prices, which suggest that we are either (i) reaching a crucial level technically (i.e. a bottom), or (ii) the fundamentals are too overwhelming to ignore, resulting in another wave of FOMO.
Weekly Chart (W1)
Very low activity this week with a high of just over 0.2220. Having said that, price has not touched the significant support line at 0.1850, which has been respected three times in the past six months. It is effectively being challenged by shorter timeframe resistance.
The pattern is shaping up to be similar to what we saw back in April but this time a bit weaker. Our belief is that price will challenge the 0.1850 level once more as the market remains undecided.
Daily Chart (D1)
This week was all about respecting the 0.2220 level, which provided sufficient resistance to further upwards movement. Now that this level has been respected, we see price return to 0.1850 levels unless the downwards trend evident on the 2H timeframe is broken. If it breaks the 0.1850 level, this paves the way for the price to fall to 0.1380.
2-Hour Chart (120)
The smaller timeframes often give away some hints about the pulse of the market. After the bounce from the 0.1850 level, we saw a return to the 0.2220 resistance line. Another descending triangle is forming with the angle suggesting a potential breakout upwards depending on whether the 0.2000 proves to be a strong enough support.
If 0.2000 gets broken in the next 2 days, our expectation is that there will be a significantly larger bearish pattern emerge.