Hi guys hope you are well and welcome to the new update on a Stellar. As in my previous post, we have seen that the Stellar had started a correction really now in this article we will try to understand how much the price action can be moved more down.
The bearish Shark has done its job:
On 8th of June I posted an article where I revealed that the price action of XLM has completed the Shark pattern on long term weekly chrt. At that time and the price action just spiked in the potential reversal zone. Therefore there was strong chances of correction rally. Below was the pattern:
Now below is a current situation and you can see that the price action has been retraced up to 0.50 Fibonacci retracement level.
The price action is rejected by $0.08 resistance:
Now if we switch to the 2-day chart then the different support and resistance levels can be clearly noticed. At this time the price action is moved back to the previous support at 6 cents after rejection from 8 cents resistance. This resistance level is very strong for the price action of Stellar as the price action never able to cross up or break out this resistance since after it was broken down in August 2019.
In case the price action will break down the $0.06 support then we have the next support level $0.04.
And if the price action will break out the 8 cents resistance then we have the next resistance level at $0.10. And then next resistance will be at 13 cents. And if this $0.13 level will be broken out then from 13 cents up to 20 cents there is no significant resistance can be seen. Therefore within very short period of time the price action can move from $0.13 to $0.20.
An expected Head & Shoulder move:
At this time the price action is likely to form a Head & Shoulder pattern. Before this, we have already seen the formation of Head & Shoulder pattern from December 2019 to Mid of March 2020. At this time the left shoulder and the head has been completed and from the neckline, the price action is moving upwards and likely to form the right shoulder.
An expected formation of Bullish Crab:
With the Head and Shoulder move the price action of XLM is also likely to complete the final leg of bullish Crab pattern. So far the price action has spiked very close to the potential reversal zone. Therefore we can expect that before the completion of the right shoulder of the Head & Shoulder pattern the price action may hit another spike up to potential reversal zone to complete this final leg.
From this level we can expect an upward short-term rally then a downward move can be expected up to the neckline of the Head & Shoulder pattern.
Note: This idea is education purpose only and not intended to be investment advice, please seek a duly licensed professional and do you own research before any investment.