- Broad-based crypto declines leave no stone unturned as Stellar dives from monthly high.
- The retreat is likely to extend further based on the downward sloping RSI.
- Support at the 61.8% Fibonacci retracement level may mark the end of the freefall.
Stellar hit a new monthly high of $0.57 during the Easter celebrations. The uptrend occurred in tandem with Ripple (XRP)’s upswing from lows around $0.55 to highs past $1. At the time of writing, Stellar is in the middle of a reversal toward $0.4.
Several tentative support areas have been broken, including $0.5. If higher support is not established, the bearish leg can explore levels around $0.4.
Stellar Focuses on Securing Formidable Support
Stellar is exchanging hands at $0.48 at the time of writing. The correction from the high traded in the first week of April was drastic. Meanwhile, attention has shifted to finding a substantial support area.
The 61.8% Fibonacci level is in line to provide immediate support. In case the price slices through this initial support, declines are likely to extend to the confluence level created by the 50 Simple Moving Average (SMA) on the four-hour chart and the 50% Fibo. Other tentative support levels include $0.42 and $0.39, as observed on the chart.
XLM/USD four-hour chart
The Relative Strength Index (RSI) has recently been rejected from the overbought region. This inferred that buyers were losing traction as bears gained ground. Currently, the RSI is falling sharply toward the midline. If the downward movement continues to the oversold region, Stellar’s pullback will be massive.
The same four-hour chart shows that the Parabolic SAR indicator has assumed a bearish impulse by flipping on top of the price. As long as the parabolas (dots) stay above XLM’, the bearish trend will become stronger.
Similarly, the Moving Average Convergence Divergence (MACD) indicator is just about to send a bearish signal. As the MACD line (blue) crosses under the signal line, overhead pressure is bound to mount. Investors use the MACD indicator alongside other technical levels to identify positions to sell the top and buy the bottom.
XLM/USD four-hour chart
Stellar’s Bullish Picture
On the upside, support at the 61.8% Fibonacci level has the potential to stop the ongoing downtrend. Note that market stability at this level would encourage investors to hold longer, as they anticipate another upswing above $0.6.
It is worth mentioning that the 50 SMA on the four-hour chart expands the gap to the 100 SMA and the 200 SMA. It implies that buyers have not lost it all and possess the potential to regain control.