In March 2018, Coinbase announced that it will list Stellar (XLM) on its platform, allowing transactions with the token. However, this was done with some jurisdictional restrictions in place — most notably the United Kingdom and the state of New York. All of this changed on September 26, 2019, when the exchange allowed purchases for New York residents. Shortly after, the XLM price reached a high of 766 satoshis.
Based on its current movement and technical reading, the XLM price is likely to eventually break down from the current pattern and head towards the support area at 700 satoshis.
Stellar Lumens (XLM) is now available to Coinbase users who are New York residents. New Yorkers can now log in to buy, sell, convert, send, receive, or store XLM on https://t.co/bCG11KMQ6s or using our iOS and Android apps. https://t.co/gArFJPP6K7 pic.twitter.com/eTtVaH9JdT
— Coinbase (@coinbase) September 25, 2019
Cryptocurrency trader @Coin_Buster stated that the XLM price is sitting on a strong convergence of support lines. Also, he advocated moving the stop/loss slightly upward in case a price breakdown commences.
Is this the right decision based on the market movement? Let’s analyze and come to a conclusion.
Another reaction on the trendline.
I’m moving my stop to 759 sats.
I would like it to flip 787 sats now. pic.twitter.com/kUcp0rBwro
— COIN BUSTER (@Coin_Buster) October 22, 2019
Bearish Pattern for XLM/BTC
Looking at the XLM price movement, we get the same support line as outlined in the tweet. However, the resistance line creates an ascending wedge, which is a bearish pattern. At the time of writing, the price was trading right on this support line.
Additionally, the price is trading above the 100-period MA — which has offered strong support throughout the entire upward move.
Besides the bearish pattern, we can also see a developing bearish divergence in both the RSI and the MACD.
This makes us think that a breakdown is likely and the XLM price will eventually reach the support area at 700.
Analyzing the original tweet, we very much agree with the stop loss at 759 satoshis and think it is a strategic placement to remove both the possibility of significant losses and a fake breakdown triggering the stop.
Do you think XLM will break down from the wedge? Let us know in the comments below.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images are courtesy of Shutterstock, TradingView.