Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice
The crypto-market has been in a state of consolidation for a while and many altcoin traders are moving to sell their digital assets across the board. Stellar Lumens [XLM] has been in a long, sustained period of consolidation too, with the same taking the form of a bearish market on the charts.
At the time of writing, XLM was priced at $0.2549, with the crypto leaning closer to its crucial support level.
Stellar Lumens 6-hour chart
Source: XLMUSD on TradingView
Stellar Lumens’ 6-hour chart highlighted the strong surge at the beginning of the year, one that pushed the crypto’s price to $0.4. However, it has been faltering since. In fact, the constant push and pull formed an important support level for the digital asset on the chart.
After breaching two important supports, XLM was close to breaching another important support at $0.2300, while giving shape to a descending triangle, a bearish signal.
Reasoning
The descending triangle signaled the rise of bearishness in the market. Further, the 50 moving average underlined the downward trending value of XLM. If its value breaches the support level, the coin’s market might record yet another sellers’ wave.
Meanwhile, the Relative Strength Index bounced back from the oversold zone. There was a brief recovery effort at $0.2300, however, the buyers were unable to hold on to this level as the RSI once again pointed south. In a low momentum market, XLM’s price will face a difficult time building back its lost value.
Crucial levels to watch out for
Entry: $0.2505
Stop-Loss: $0.2681
Take-Profit: $0.2114
Risk-to-Reward: 2.22
Conclusion
The ongoing market trend has been painting a good picture for short traders. With an entry at $0.2505, the traders can take profit at $0.2114. XLM’s price will be moving towards yet another level of support at $0.2084, a level that is not a major support since it has not been tested more than once.
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