XLM price could undergo a strong bearish reversal if it falls below an important support level, according to an analyst. Such a move would wipe out some of the gains made over the past 30 days, when they jumped nearly 500%.
XLM price could be corrected: analyst
Stellar Lumens has been a strong performer this year as it reached a high of $0.6345, its highest level since May 2021. At its highest point, it was up over 743% from its previous high. the lowest this year.
Most analysts are bullish on Stellar’s price, aided by its strong fundamentals and technical metrics. In a post Premium Pink predicted that Stellar would rise to $0.98, a few points below the psychological point of $1. If this happens, it means that XLM price has a 90% upside from the current level.
However, the analyst warned that XLM price would see further downside if it falls below $0.40. If this happens, he sees the coin plunging to $0.3235, a 35% decline from the current level.
Stellar Price Analysis: Mean Reversion is a Key Risk
The weekly chart shows that the price of XLM coin has gone parabolic in rising for four consecutive weeks. There are signs that it is forming a bullish pennant chart pattern, a popular continuation sign. This pattern is made up of a long vertical line and a symmetrical triangle and often results in a bullish breakout.
Further upside potential will be confirmed if Stellar price rises above the upper end of the pennant at $0.6355. If this happens, like we predicted it this week, will increase the chances of the coin surpassing its all-time high of $0.7960, followed by the psychological point at $1.
The risk, however, is that the coin forms a hangman’s candlestick pattern. It is characterized by a long lower shadow and a small body and usually forms on the upper part of a trend. In most time frames, this hangman results in a breakout to the downside, especially when the price is moving below its lower side.
The other risk for Stellar Price is that it could go through a reversion to the mean. This is a situation where an asset falls back to its average prices. In this case, it remains significantly above the 50-week moving average at $0.1567 and the 200-week moving average of $01.448. Such a drop would imply a decline of almost 70% compared to the current level.
Frequently Asked Questions (FAQ)
Generally speaking, Stellar could continue to rise after the current pause. However, there is a risk that it could fall sharply as investors take profits.
Stellar has formed a hanging man pattern on the weekly chart, indicating a potential breakdown. It can also fall due to mean reversion.
Its rebound is mainly due to the recent election of Trump and potential favorable regulations in the United States.
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Disclaimer: Content presented may include the author’s personal opinion and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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