As we have seen in my previous article that the priceline of Stellar was moving in a falling wedge pattern. When I published my last post at that time the priceline of XLM was at the support of this falling wedge and I was waiting for two more indicators to turn bullish to predict the bullish divergence for breakout. These two indicators are momentum indicator and the stochastic. The reason I am using these two indicators to predict the breakout here because the price action of lumens is very much synchronized with these two indicators. On the chart it can be easily observed that whenever the priceline of lumen hits the support and the momentum turns weak bearish from strong bearish that is a kind of bullish signal and stochastic gives bull cross then priceline takes a bullish divergence and hits the resistance of the wedge.
I was expecting the same move this time. I am sharing the both screenshots the previous one and the current situation. It can be easily obeserved that when I shared the chart in my previous article at that time the stochastic was oversold and momentum indocator was strong bearish. In the next screenshot you can see the current situation that when the momentum turned waek barish and the stochastic gave bull cross the price action again took powerful bullish divergence as it has been doing in the past and at this time the Stellar is attempting to breakout the resistance of this wedge.
The previous move:
The current move:
Volume profile and Bollinger bands:
here the two more indicators are playing very important role one is the volume profile indicator and other one is the bollinger bands. If we place the volume profile on the complete price action moving within the falling wedge pattern then we can see that the trader’s interest is very weak below $0.038. Therefore when the priceline moved down where the trader’s interest is low the XLM turned bullish and reached the resistance of the wedge. And if we see the bollinger bands then it can be noticed that when the priceline made its first attempt to breakout the resistance of the wedge in May 2019 then the bollinger bands was below the resistance of wedge therefore it stopped the priceline of Stellar to have a breakout. After that the priceline made another attempt to break out the resistance of the wedge in Feb 2020. At that time the bollinger bands was again below the resistance of falling wedge and became a strong hurdle for priceline to breakout. But this time we have some different situation the bollinger bands is above the resistance of the wedge. Therefore the price action of Lumens can easily move out from the resistance of wedge, moreover if we observe the movement of the bollinger bands then it can be easily seen that the bollinger bands is slightly moving up and showing its tendency that it is making the way for the priceline to move up.
Bullish Crab pattern:
During the strong bearish move in the month of March 2020 the XLM has completed the formation of bullish Crab pattern. I also have shown this pattern in my previous post. If we take a closer look on the chart then it can be easily noticed that the priceline has just hit the spike in the potential reversal zone and as per sequence of bullish Crab the price line was the supposed to move up in the Fibonacci projection area of A to D leg from 0.382 to 0.786 Fibonacci level. We can see that finally the price action took a powerful bullish divergence and produced more than 93% bullish rally. At this time the 0.786 Fibonacci level is a strong resistance for the Lumen. And we can observe at this time the price line is hitting at this level for third time this is the same level where we also have the resistance of the falling wedge pattern.
Bullish Crab before execution:
Bullish Crab after execution and 93% rally:
Simple moving averages.
The position of the simple moving averages on the daily chart also goes in the favour of the breakout from the falling wedge pattern. If we see on the daily chart then the priceline has aggressively crossed up the 25, 50, 100 and 200 simple moving averages. Now it has the strong support of all these SMAs. And the 25 simple moving average has formed the golden cross with 50 and 100 SMAs and moving forward to cross up the 200 simple moving average. Following the 25 simple moving average 50 simple moving average is also moving up to form the golden cross with 100 and 200 SMAs. The golden cross between 50 and 200 simple moving average is considered as a strong bullish signal among the traders community. They always take it as a strong buy signal. After that we can expect the 100 simple moving average will also form the golden cross with 200 simple moving average. And after all these golden crosses we can have a complete opened alligator mouth of the moving averages below the price action of XLM that can produce more powerful bullish rally.
Long term resistance levels:
Now if we switch back to the weekly long-term chart. Then we find two major resistance levels on the way of Stellar. The first resistance level is $0.09, We can see that upto 2019 this resistance level was working as a strong support for the price action but once it is broken down in August 2019 after that the Lumen never able to cross up this resistance level again even after 3 attempts. Once the priceline will be able to cross up the 9 cents resistance then the price action may re-test this previous resistance as a support and move up to break out the next major resistance at $0.14 after breaking out this resistance the XLM doesn’t have another other resistance upto $0.23, so we can expect a faster move from $0.14 to $0.23.
Powerful bullish move that can lead the XLM to hit $2:
Now I would like to show you my favourite part of this analysis and that is the harmonic move of Stellar. If we move back in 2017 the priceline formed a big bullish harmonic BAT pattern on long-term weekly chart. And from the potential reversal zone of this BAT pattern the price action moved up with very powerful bullish divergence that leaded the Stellar to hit $0.51 that was more than 4000% powerful bullish rally. Now if we switch to the more bigger time period monthly chart then we can observe that same as like the previous move of 2017 the price action has a gain formed another very big bullish BAT pattern. And from past 5 months the priceline was moving at the bottom of this is BAT and now it has retraced back in the potential reversal zone. The potential reversal zone of this BAT starts from $0.11 and ends up to $0.059. We can expect another very big powerful divergence from this PRZ level but if I talk realistically then as per Fibonacci sequence the price action of Lumens should enter in the Fibonacci projection area from 0.382 to 0.786 Fibonacci projection of A to D leg. That is from $0.23 up to $0.41 that is also upto 600% big gain. However for stop loss we should use the potential reversal zone to minimize our risk.
Similar harmonic BAT moves of 2017 and 2020:
All indicators are turned bullish therefore this time there are strong chances that XLM will breakout. Futher bullish movement depends on breaking out $0.09 $0.14 resistance levels, once the Stellar will break out these two resistance levels then it can turn very strong bullish that will lead the execution of bit bullish BAT pattern. And this pattern can further push the priceline to hit $2 target.
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.