$XLM
Trade now . . bearish sentimentsโคโคโคโค
๐๐๐ ๐๐ง๐๐๐ ๐๐ค๐ง๐๐๐๐จ๐ฉ: ๐๐๐ฎ ๐๐ฉ๐๐ก๐ก๐๐ง ๐๐ช๐ข๐๐ฃ๐จ ๐๐๐ฎ ๐พ๐ง๐๐จ๐ ๐ผ๐๐ฉ๐๐ง 80% ๐๐๐ก๐ก๐ฎ ๐๐ฃ ๐๐๐จ๐ฉ 7 ๐ฟ๐๐ฎ๐จ
XLM price rally lost momentum in the past two consecutive days as the crypto market bull run faded. Stellar Lumens token plunged to a low of $0.4300 today, July 15, down by over 16% from the YTD high. This article explores why the XLM token may plunge by 40% in the coming days.
The daily timeframe shows that the XLM price went parabolic last week, hitting a high of $0.5145 as the crypto market rally intensified. This surge pushed it significantly higher than its recent moving averages, while oscillators such as the Stochastic and the Relative Strength Index (RSI) reached extremely overbought levels.
The main risk that the Stellar price faces is known as mean reversion. This refers to a situation where assets that have deviated so much from their moving averages move back close to them.
XLM formed a mean reversion in November last year when it surged by nearly 500% and deviated from its moving averages. It then dropped gradually until it closed that gap months later.
The other risk that the Stellar Lumens price faces is that it has deviated substantially from the upper side of the descending channel that connects the highest and lowest swings since December last year.
In most cases, an asset often retreats and retests the former resistance after it makes a strong breakout. This situation is known as a break-and-retest pattern, and is usually a highly bullish sign.
Therefore, the most likely scenario is where the XLM price drops by about 40% and then resumes the bullish trend. The bullish Stellar price forecast will be invalidated if it moves above the year-to-date high of $0.5155