2023-5-9 14:00 |
The Stellar (XLM) price has decreased since the beginning of April and is in the process of creating its fourth consecutive bearish candlestick.
Most of the weekly and daily time frame readings are bearish, supporting the possibility of more downside in May.
Stellar Price Continues Descent After RejectionThe Stellar price has been steadily rising since the beginning of the year. There was a significant breakthrough in January when the price surpassed a descending resistance line that had been in place since the all-time high.
Such a breakout from a long-term structure often results in significant upward movements and indicates the end of a correction.
Subsequently, the XLM price rose to the long-standing resistance level, averaging $0.105, but failed to break out and instead formed a bearish engulfing candlestick during the week of April 17-24.
This type of candlestick is bearish and invalidates the entire previous period’s decline in the next one, which is confirmed by a close below the opening price of the previous period.
Since then, the XLM price has created another two bearish candlesticks and is in the process of creating the third one, gradually decreasing toward the $0.075 support area.
XLM/USDT Weekly Chart. Source: TradingViewThe weekly Relative Strength Index (RSI) also gives a bearish reading. When evaluating market conditions, traders use the RSI as a momentum indicator to determine if a market is overbought or oversold and to decide whether to accumulate or sell an asset.
If the RSI reading is above 50 and the trend is upward, bulls still have an advantage, but if the reading is below 50, the opposite is true. After deviating above 50 (red circle), the RSI fell below the line, a sign of a bearish trend.
XLM Price Prediction: Mixed RSI Signs Cause ConfusionNoticeably, the failed breakout coincided with the rejection from the $0.105 resistance area. Therefore, it confirms its validity.
The bearish XLM price prediction from the weekly time frame aligns with the technical analysis from the daily one. There are two main reasons for this.
Firstly, the XLM price fell below the short-term $0.095 area and validated it as resistance (red icon). After the preceding breakout, the area was expected to provide support.
However, it did not, which is considered a sign of weakness.
Secondly, the daily RSI is below 50 and decreasing. As outlined previously, this is considered a bearish sign.
So, the most likely scenario is a decrease toward the next support at an average price of $0.085. The support area is created by an ascending support line in place since the beginning of the year.
XLM/USDT Daily Chart. Source: TradingViewThis bearish Stellar price forecast will be negated if the price moves above the minor $0.095 resistance area. In that case, the Stellar price is expected to increase to the long-term resistance at $0.105.
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