June 30, 2018
Stellar (XLM) is reaching a crucial point technically. What excites us the most, is the answer to “what happens when Stellar breaks out of the descending triangle formation?” As we enter into the second half of 2018, it is not unreasonable to see all-time highs being broken.
Weekly Chart (W1)
Price has returned to the significant support line at 0.1850, which has been respected three times in the past six months. Shorter tails suggest that there aren’t as many buyers this time as there were back in December and March.
If price closes above 0.1850, we expect a short rally up to 0.3000 prior to facing some resistance of the descending triangle. If price closes below 0.1850, our expectation is that bears will drive XLM down to 0.1380, which was strongly supported back in December.
Daily Chart (D1)
A similar pattern is emerging when comparing the price’s response to the 0.1850 support back in mid-March to mid-April. We’re seeing the market a lot calmer this time, with the tug-of-war between bulls and bears being much more muted. If bulls win out, there should be a month of consolidation before we see prices rise. In the case that bears win, it won’t be long before we’ll notice that the price is on the way to 0.1380.
2-Hour Chart (120)
The smaller timeframes often give away some hints about the pulse of the market. The downward pressure of the first descending triangle marked above was predictable, and with the 0.1850 support line close by, this was an obvious target that bears were headed towards.
Consolidation at the 0.1850 was also expected but the formation of another descending triangle was particularly interesting when comparing it to the size and shape of the one we saw back in March – April. The fake breakout overnight and the 5% push upwards to 0.2000 was not unique to XLM – we experienced this trend across multiple cryptocurrencies.
It seems that this might be short-lived though as we see some resistance at 0.2000. The 0.1850 support will be respected again in the next few hours and the bears seem to be interested in taking back control after the hype.
Where next for the crypto market?
In the world of investing, fundamentals and a price of an asset class rarely move in tandem. Usually, one leads the other.
In 2017, the prices of cryptocurrencies skyrocketed, but the fundamentals were left lagging behind. That resulted in a sharp correction. While most digital currencies are down more than 50 percent from their highs, the fundamentals have improved rapidly this year.
Everyone, right from the investment banks to the large corporations are exploring the vast opportunities of the blockchain technology and cryptocurrency trading. The educational institutions, governments, and the central banks are also not left behind. They too are exploring the various options available in this breakthrough technology.
When Gold Futures were launched, Gold dipped for an extended period of time prior to coming back up to all-time high levels. There is no reason why Bitcoin Futures are any different. In reality, Bitcoin’s price is going to be more dependent on events in the Bitcoin economy.
When we see the recalibration of fundamentals to price, a lot of the naysayers will be proven wrong.
Who said speculating was boring?