XLM Price Forecast: Stellar Could Plummet to $0.175
- Stellar breaks under a symmetrical triangle pattern as declines to $0.175 linger.
- Support at $0.22 must hold to avert the potentially massive breakdown.
Stellar finally broke out of an extended consolidation period. Nonetheless, the cross-border money transfer token assumes a downtrend. At the time of writing, XLM trades at $0.242 amid a fierce fight between the bulls and the bears. Note that XLM may extend the bearish leg to $0.0175 before another recovery attempt comes into the picture if the downtrend continues.
How formidable is Stellar price downward action toward $0.175?
The four-hour chart shows the formation of a symmetrical triangle pattern. The chart pattern is formed by converging a couple of trend lines that link a series of sequential peaks and troughs. Generally, the trend lines are supposed to cross at an approximately equal slope. The formation brings to light a period of consolidation ahead of either a breakout or a breakdown.
Realize that a breakdown occurs from the ascending trendline and identifies the beginning of a downtrend. On the other hand, a breakout happens at the descending trendline and signifies the start of a bullish trend. Symmetrical patterns tend to have precise price targets for the breakout or breakdown, mainly measured from the highest point to the pattern's lowest point.
Therefore, Stellar will likely drop by 31% to test the support at $0.175. Once the breakout has been confirmed, the least resistance path mainly shifts to the downside, as shown on the chart.
XLM/USD four-hour chart
Realize that the Moving Average Convergence Divergence (MACD) indicator has a massive bearish signal. This call to sell appeared when the MACD crossed beneath the mean line (0.00). As the 12-day exponential moving average moves below the 26-day moving average, the odds for downward action intensify.
Looking at the other side of the fence
The bearish outlook will be invalidated if the Stellar holds above $0.22. Here, bulls will regain balance as they focus on gains above $0.26 and toward $0.3. Keep in mind that the Relative Strength Index (RSI) seems to be leveling around 30. A break into the oversold region may allow more buyers to enter the market and push the Stellar price higher.