- Stellar’s higher highs streak was disrupted by a big consolidation move after a higher low
- Price is consolidating for more than a month now, resulting in a significant action in either direction
- 50 EMA(green) is proving its worth
- News like the possible issuance of a central bank digital currency (CBDC) by the European Union could be a momentum starter
XLM was on a solid uptrend for quite some time and made higher highs before undergoing such a considerable consolidation from $0.35 to $0.46 during the end of February. Consolidation is generally when the price takes some rest and coils up for a big move to help either side. Price is above 50 EMA (green), providing a constant support level in the daily timeframe. The market capitalization and 24 hour volume of the coin is $10,591,731,671 and $2,009,464,839 respectively.
Under consolidation provides many trading opportunities to buy at the bottom and short at the top, but the real opportunity is when the break occurs. The movement could be on either side, but as we know, the bigger the consolidation, the more significant move it might bring. For such a long consolidation, the movement after breakout could be humongous, but the move’s direction is unpredictable many times. An upside breakout could be expected at least to $0.56. If this level is broken, then the next upside move could be 5-10%. Whereas if the price breaks the range and moves downward, then the first support is $0.31, and the next support zone is of range $0.22 to $0.24.
The price is quite close to 50 EMA(green) & 200 EMA (black). However, a recent crossover of 50 EMA & 200 EMA suggests a coming uptrend.
RSI (65.07) forms a bearish divergence indicating another dip possibility that might increase the duration of consolidation.
However, the possibility of issuing a central bank digital currency (CBDC) by the European Union could improve the odds of an upside breakout. Confirmation of this news could be advantageous.
The long consolidated price will give a firm direction to wait for a breakout and enter a retest. Another option would be to buy at the bottom of the range and sell at the top or vice versa till the range continues. The latter option is quite unpredictable as 50 EMA and 200 EMA are very close to the price in the 4-hour timeframe.
Consolidation range – $0.35 to $0.46
Support levels– $0.31, zone of $0.22 to $0.24
Resistance level – $0.56