Stellar Looking For Momentum To Take Us To 50%+ Profits!
Updated
Ok, let’s have a look at XLM (Stellar)!
For those of you who missed my early call on EOS, I have another potential winner here for you! The most important thing you will notice straight away when looking at my chart is that we are forming a cup and handle pattern. As you may or may not know, cup and handle patterns are considered bullish continuation patterns; and if we can break out and close above the rim - we should see an excellent buying opportunity. I have added our target zone, though it is a good idea if you are risk adverse to place a buy order above the rim (upon a confirmed breakout with supporting volume) and laddered sell orders leading up to the target zone. If we hit the target we are looking at a potential 58% profit on our trade. It is worth noting that this pattern has taken 10 weeks to form so far, so whilst we will rise pretty quickly, it could ultimately take us weeks to reach our target.
Let’s analyse the pattern itself. We have a nice U shaped bottom which is a stronger signal as compared to a V shaped bottom. Volume has been low for a while, but has died off even more during the build up of the right hand side of the pattern which is typical and what we would expect. We may see a break out of the handle in the coming day or two, however there is an equal chance we will retrace from the resistance of the rim before making and final and spectacular break through.
A look at our other indicators might tell us if a break out is likely to occur shortly, or we will have to wait a little longer.
Aroon Up is below 50 and Aroon Down is flat to the floor at zero. This indicates no change in trend is expected in the very short term. With the Aroon Up below 50 we are subsequently not going to move higher either; which suggests a more likely scenario to play out in the immediate short term is for a retrace from the rim in preparation for the spectacular break through I mentioned earlier.
RSi is at about 69 so we are not overbought nor oversold, indicating we could go either way here. However when we combine this knowledge with what the Aroon indicator is telling us, this further supports a likely retrace from the rim.
The MACD is level with the signal line, with not a lot of positive momentum. If we retrace from the rim it will actually allow us to fall below zero which would ultimately provide us with a lot of the required room needed for the upward momentum which will be generated by the break out.
The EMA 50 is still crossed over bullish and trending well above the 200 EMA. Considering we are currently trading well above the 50 EMA it gives me more reason to believe a retrace from the rim is what we are in store for in the short term. We would then likely re-test the 38.2% Fib (or potentially a bit lower to the 50 EMA) as support and this will give us our bounce required to build momentum and break through the rim.
In summary I am extremely bullish. I don’t think we will break out in the next day or two and that we will likely see a retrace to retest the 38.2% Fib and/or 50 EMA as support. We will then have plenty of room for momentum to build and break us out to the upside of the rim. With confirmation of this breakout we will then set about our mission to reach the target. My advice is to watch this carefully and set a buy order just above the rim on confirmation of the break out and then (as mentioned earlier) set laddered sell orders on the way up to the target. Once the target is reached we will likely be exhausted and set about a period of consolidation. A bit of caution - If we do break out in the next day or two, I don't think we will have the room for the momentum required to reach the target, so a retrace is actually a better scenario.
Cheers
For those of you who missed my early call on EOS, I have another potential winner here for you! The most important thing you will notice straight away when looking at my chart is that we are forming a cup and handle pattern. As you may or may not know, cup and handle patterns are considered bullish continuation patterns; and if we can break out and close above the rim - we should see an excellent buying opportunity. I have added our target zone, though it is a good idea if you are risk adverse to place a buy order above the rim (upon a confirmed breakout with supporting volume) and laddered sell orders leading up to the target zone. If we hit the target we are looking at a potential 58% profit on our trade. It is worth noting that this pattern has taken 10 weeks to form so far, so whilst we will rise pretty quickly, it could ultimately take us weeks to reach our target.
Let’s analyse the pattern itself. We have a nice U shaped bottom which is a stronger signal as compared to a V shaped bottom. Volume has been low for a while, but has died off even more during the build up of the right hand side of the pattern which is typical and what we would expect. We may see a break out of the handle in the coming day or two, however there is an equal chance we will retrace from the resistance of the rim before making and final and spectacular break through.
A look at our other indicators might tell us if a break out is likely to occur shortly, or we will have to wait a little longer.
Aroon Up is below 50 and Aroon Down is flat to the floor at zero. This indicates no change in trend is expected in the very short term. With the Aroon Up below 50 we are subsequently not going to move higher either; which suggests a more likely scenario to play out in the immediate short term is for a retrace from the rim in preparation for the spectacular break through I mentioned earlier.
RSi is at about 69 so we are not overbought nor oversold, indicating we could go either way here. However when we combine this knowledge with what the Aroon indicator is telling us, this further supports a likely retrace from the rim.
The MACD is level with the signal line, with not a lot of positive momentum. If we retrace from the rim it will actually allow us to fall below zero which would ultimately provide us with a lot of the required room needed for the upward momentum which will be generated by the break out.
The EMA 50 is still crossed over bullish and trending well above the 200 EMA. Considering we are currently trading well above the 50 EMA it gives me more reason to believe a retrace from the rim is what we are in store for in the short term. We would then likely re-test the 38.2% Fib (or potentially a bit lower to the 50 EMA) as support and this will give us our bounce required to build momentum and break through the rim.
In summary I am extremely bullish. I don’t think we will break out in the next day or two and that we will likely see a retrace to retest the 38.2% Fib and/or 50 EMA as support. We will then have plenty of room for momentum to build and break us out to the upside of the rim. With confirmation of this breakout we will then set about our mission to reach the target. My advice is to watch this carefully and set a buy order just above the rim on confirmation of the break out and then (as mentioned earlier) set laddered sell orders on the way up to the target. Once the target is reached we will likely be exhausted and set about a period of consolidation. A bit of caution - If we do break out in the next day or two, I don't think we will have the room for the momentum required to reach the target, so a retrace is actually a better scenario.
Cheers
Note
Upon reviewing this against the performance of other alts in similar situations, I would reduce the target to be equal to the 100% Fib level (equal ATH). This would reduce risk relying on the outlier low that occurred 18th March 2018 when we finally found a bottom. This would mean the target is actually more around 6380. As I mentioned earlier, this target is based on a further retrace before breaking out. If we break out in the next day or two, then I would be moving my target lower in order to err on the side of caution; and keep a close eye on our momentum indicators. I will try and update what my revised targets are if this occurs, but never-the-less set your own profit taking levels as you see fit in this scenario.
Note
Update: As you can see we are in the buy zone, however we do not have the volume required at this stage to make this a confirmed break out and thus viable trade. Our technical indicators are still indicating a strong buy, however I would reframe from trading unless we see an influx in volume by todays close, tomorrow at the very latest. If we don't see this volume, then I will re-assess the position and what may come next.
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