XLM realized a bearish shooting star candle pattern level on May 10 after testing the channel’s upper trend line. As long as Stellar price remains below the candle’s high, the outlook is pointed bearish, targeting a 40% decline.
Stellar price rallied strongly into February, but XLM has only managed to print marginal new highs in April and again in May, delivering a disappointing 30% return from the February high to the May high.
On May 10, XLM price closed with a bearish shooting star candlestick pattern on the daily chart. It was an eventful end to Stellar’s price first attempt to release above the multi-month channel. The candlestick reversal pattern level features buyers’ struggles to lift prices higher against the overpowering distribution of the sellers.
On May 12, XLM declined below the shooting star low at a price of $0.618, confirming the pattern and a bearish outlook.
To add to the heightened bearishness, the daily and weekly Relative Strength Indexes have not printed a new high along with XLM since February, creating a bearish momentum divergence.
The downside support level begins at the 61.8% retracement of the April-May rally at a price of $0.539 and then the 50-day simple moving average at a price of $0.528. Some support may develop at the 78.6% retracement at $0.473, but the channel’s lower trend line currently at a price of $0.402 will capture sellers’ attention and leave Stellar with a 40% decline from the price at the time of writing.
XLM price has recovered over the last two days, but to invalidate the bearish outlook, Stellar price needs to rally above the shooting star high at $0.780.
A general rebound for the crypto market may permit XLM price to extend the current price rebound, raising the odds that Stellar will finally overcome the channel’s upper trend line at a price of $0.733 and surpass the shooting star candlestick high at $0.780.
Under this scenario, bullish investors can expect the XLM price to target the 161.8% extension of the April decline at a price of $0.981 and the psychologically important $1.00.
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