Stellar/Bitcoin (XLM/BTC) is one of the few cryptos that is still in the green year to date. It opened at 0.00002553 in 2018 and as of this writing, it is up by over 40%. However, XLM/BTC appears to be in the midst of a pullback. This development can be jarring to market participants, especially after the pair recently pierced resistance of 0.00004.
Nevertheless, long-term investors shouldn’t be concerned. It appears that this pullback is a setup for a big comeback.
Technical analysis show that Stellar/Bitcoin is creating a large symmetrical triangle pattern on the daily chart. This view comes after the pair failed to take out resistance of 0.00004. This tells us that the most recent rally was the D-wave of the triangle. If that’s the case, the current leg down should be the E-wave of the triangle.
To support our view, technical indicators are flashing signs of exhaustion. The daily RSI respected resistance of 74 and then it generated a lower high of 63.
In addition, volume is steadily declining. While this means that profit-taking is the focus, the significant decrease in volume shows that many participants are holding on to their positions. For this reason, this pullback might be significantly shorter than A-wave and C-wave.
The strategy is to buy the dip as close to 0.000031 as possible. If bulls preserve this support, they will establish a higher low setup. This will attract the momentum needed to climb to our initial target of 0.00004. Take that out and the next target is 0.00005.
The process may take more than a month.
Daily Chart of Stellar/Bitcoin on Binance
As of this writing, the XLM/BTC pair is trading at 0.00003683 on Binance.
Summary of Strategy
Buy: As close to 0.000031 as possible.
Target: 0.00004 and then 0.00005.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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