- Stellar ignores bearish calls in the market, embracing support at the 50 SMA.
- A key ascending triangle breakout could bolster XLM toward $1.
Stellar has resumed the uptrend after retreating from the resistance encountered at $0.58. Many analysts believed that the cross-border value transfer token would extend the downtrend. However, the 50 Simple Moving Average (SMA) on the four-hour chart provided the much-needed support, allowing the bulls to retake control.
Stellars’ Uptrend Shapes Up as $1 Beckons
An ascending triangle pattern on the four-hour chart shines a light on a possible upswing to $0.75. Note that the immediate downside has been supported by a confluence support area formed by the 50 SMA and 100 SMA. The triangle’s hypotenuse adds weight to the anchor zone; thus, bulls have ample time to focus on gains toward $0.75 and $1.
It is worth mentioning that ascending triangles are extremely bullish chart patterns. The x-axis is a barrier to bullish advances, while the hypotenuse shows that sellers cannot extend the lows further.
A breakout occurs before the trend lines converge, but the market is characterized by reduced trading volume before that happens. Traders need to wait for a confirmed break above the x-axis. A spike in trading volume validates the breakout, which has a precise target measured from the triangle’s lowest to highest points.
XLM/USD four-hour chart
Meanwhile, the ongoing recovery has been validated by the Relative Strength Index (RSI). Following the retreat from the overbought region, the indicator bounced off the support at 40. Currently, the RSI is moving toward the midline, insinuating that the bullish grip is strengthening.
Stellar’s Bearish Outlook
It is essential to realize that there are instances when an ascending triangle pattern culminates in a breakdown. Therefore, the 50 SMA and 100 SMA support need to hold firmly. Moreover, by no means should the ascending trend line break. Otherwise, a correction may come into the picture, forcing Stellar to seek anchors toward $0.44 and $0.38, respectively.