Despite the decline, Stellar dynamics and indicator values on several timeframes confirm a bullish trend reversal. They indicate that the price rise is not over yet, and it will reach a new yearly high.
They indicate that the price rise is not over yet.
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Stellar has broken through 400-day resistance
According to technical analysis of the weekly chart, the XLM price broke through the 400-day resistance area at $0.13 on July 10 and hit a new yearly high at $0.20. Breakouts of such long-term structures often indicate that the price has started a new bullish trend reversal.
After reaching an all-time high, the Stellar price fell sharply, forming a long upper wick (red icon). However, the token remains above the $0.13 area and is likely to turn it into support. This often happens after a resistance level breakdown.
Source: TradingView
The weekly relative strength index (RSI) is also showing bullish signals. The indicator is rising and is above 50, which is considered a sign of a bullish trend.
XLM forecast through the prism of wave analysis
Meanwhile, the wave analysis of the shorter daily timeframe is also optimistic.
The most likely scenario suggests that the Stellar price is in the fourth wave of a five-wave bullish structure. If this forecast is correct, the price has already reached a local bottom and will soon rise to the next resistance at $0.23 level. This will complete the formation of a five-wave structure, after which a correction will begin.
And then a correction will begin.
Source: TradingView
An engulfment of the first wave high (red line) at $0.12, however, will cancel this bullish outlook and mean that the trend has turned bearish. In that case, the XLM price could fall to the next support at $0.09.