Market seems bearish for now, we all see most red in The Cryptocurrency's Market while there're also Coins that showed significant gain. As well as our beloved Stellar, after moving sideways for few days, we see the price is making a downturn progress to beat the last swing low on The Daily Timeframe.
Alright, when we already analyzed XLM on the 3 Days Timeframe yesterday, as well as a little explanation about the theory and what's on my mind (read my Article yesterday if you haven't, so youxll know the point and where we are on), and now, let's dive into the updated XLM/USDT chart on the daily timeframe and see what insights we can glean on. I use The Daily Timeframe to dive into more of a local wave count and the diferrence of the price changes. Let's get into it!
Key Observations of The Daily Timeframe
Price Action: The price has continued its downward trend, currently sitting at 0.29253 (by the time of this writing). This confirms the bearish momentum we were discussing in the 3-day timeframe analysis.EMAs: The price is below all three EMAs (7, 25, and 99), reinforcing the bearish sentiment. The EMAs are also showing a clear downward slope, indicating a strong downtrend.Volume: The volume bars are relatively moderate, suggesting that the selling pressure is consistent but not necessarily overwhelming.MACD: The MACD is negative (-0.00155) and the MACD line is below the signal line, confirming the bearish momentum.RSI: The RSI values (24.07610 and 32.50072) are low, indicating that the asset is oversold. This could suggest that a temporary bounce or consolidation is possible in the short term.STOCHRSI: The STOCHRSI is at 0.00000, indicating that the asset is deeply oversold. This further supports the possibility of a short-term bounce or consolidation.
Connecting The Daily to The 3-Day Analysis
Confirmation of Bearish Trend: The daily chart confirms the bearish trend we observed in the 3-day timeframe. The price continues to move lower, reinforcing the potential Wave C scenario we discussed.Potential for Short-Term Bounce: While the overall trend is bearish, the oversold readings on the RSI and STOCHRSI suggest that a short-term bounce or consolidation is possible. This aligns with the potential Fibonacci retracement levels we identified in the bearish scenario, where the price might find temporary support.
Scenario Analysis and Trading Decisions
Bearish Scenario (Continued)
Confirmation: The daily timeframe strongly supports the bearish scenario. The price action, EMAs, MACD, and RSI all point to continued downward momentum.Potential Entry Points for Short Positions: If the price continues to break below recent support levels, around 0.262, it could present opportunities for short positions, aim for 0.25 for the 100% retracement from the ATH for the C legs as I told you in many of posts before. If it holds, the we can consider the price will might be aiming for the 3rd Wave or the 5th Wave up. If it doesn't hold, read the next point.Potential Profit Targets: Use the Fibonacci retracement levels we discussed in the bearish scenario (which is 0.1878 left) as potential profit targets in C legs Bearish Scenario.Stop-Loss: Place stop-loss orders above recent highs or key resistance levels to manage risk.
Potential Short-Term Bounce Scenario
Oversold Indicators: The oversold RSI and STOCHRSI suggest a possible short-term bounce.Potential Entry Points for Long Positions (Counter-Trend): If the price shows signs of strength and breaks above a minor resistance level, it could present an opportunity for a short-term long position.Potential Profit Targets: Use minor resistance levels or Fibonacci retracement levels as potential profit targets for a counter-trend trade.Stop-Loss: Place stop-loss orders below recent lows or key support levels to manage risk.
Potential Long-Term Bullish Scenario (3rd/5th Wave)
Yesterday, we discussed the possibility that the initial surge from the 0.0757 low to the 0.6374 high could be the beginning of a larger impulse wave. We explored two potential bullish scenarios:
Scenario 1: Wave 1 Completion: The 0.6374 high was Wave 1, and the current decline is Wave 2. If this is the case, a substantial Wave 3 would follow, pushing the price significantly higher.Scenario 2: Wave 3 Completion: The 0.6374 high was Wave 3, and the current decline is Wave 4. In this case, a Wave 5 would follow, reaching new highs.
Factors Supporting the Potential Long-Term Bullish Scenario
Initial Surge: The sharp and significant upward move from the 0.0757 low indicates strong buying interest and potential accumulation.Fibonacci Extension Targets: If the 0.6374 high was Wave 3, we calculated potential Wave 5 targets around 1.5462, 2.1079, and 3.0168. These suggest significant upside potential.Long-Term Trend Reversal: If the current decline is a corrective Wave 2 or 4, it could set the stage for a major long-term trend reversal.
Challenges to the Long-Term Bullish Scenario
Current Bearish Momentum: The daily timeframe clearly shows bearish momentum, with the price below all EMAs and negative MACD.Potential Wave C: The current decline could be a Wave C within a larger corrective pattern, which would invalidate the bullish scenario. Even of this is the case, we'll see most common that after Wave C, the starting impulse of another bullish continuation.Market Sentiment: The overall cryptocurrency market sentiment can significantly impact XLM's price action.
Conditions for the Long-Term Bullish Scenario to Play Out
For the long-term bullish scenario to materialize, we would need to see:
Strong Bullish Reversal: The price needs to show a clear and decisive bullish reversal, breaking above key resistance levels and EMAs.Increased Volume: The volume should increase significantly during the upward move, confirming strong buying pressure.Bullish MACD Crossover: The MACD line should cross above the signal line, indicating a shift in momentum.RSI and STOCHRSI Breakout: The RSI and STOCHRSI should break above their respective overbought levels.Confirmation on Higher Timeframes: The 3-day and weekly timeframes should confirm the bullish reversal.
Trading Decisions for the Long-Term Bullish Scenario
Patience: It's crucial to be patient and wait for confirmation of the bullish reversal.Entry Points: Potential entry points for long positions would be after the price breaks above key resistance levels and EMAs, with confirmation from other indicators.Stop-Loss: Place stop-loss orders below key support levels to manage risk.Profit Targets: Use Fibonacci extension levels as potential profit targets.
Important Considerations
Risk Management: Always use proper risk management techniques, including stop-loss orders and position sizing.Market Conditions: Consider the overall market sentiment and news that could affect XLM.Adjustments: Be prepared to adjust your analysis as new price action emerges.
In summary, while the current daily timeframe shows bearish momentum, the potential for a long-term bullish scenario remains. However, it's crucial to wait for confirmation of a bullish reversal and use proper risk management techniques and as I told you that if we have enough margin with 0 liquidation and the ability to use Martingale Strategy, you can start entering a Long Position from this point or set a limit order for Long Position around 0.255/0.25 in order to hope for the potential bullish scenario of the 3rd/5th impulsive wave within this theory.
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Well Fellas, last but not least, remember that this is not financial advise and should not be take into one. Trading is risky and you should always do your own research before. As always, choose your position calmly, trade wisely and stick to your trading plan. Discipline and patience is the key cause there's always be opportunity. I hope you always be happy, healthy and wealthy and may you have huge profit. Happy Trading and Cheers... 🍻
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