Timing A Bottom With Stellar (XLM)
Updated
Wow, the bear market for XLM really seems never-ending doesn't it? Well, the good news is, there are several factors leading me to believe that this may FINALLY be the bottom. I know, I've tried to call the bottom on the XLM/BTC ratio a number of times this year, but each time XLM broke support. I did mention, however, that XLMUSD was still in a clear downtrend, and that it wouldn't be a great idea to buy until it exits. This is actually why I didn't even buy XLM in the December - February period, when I bought ETH, LTC, NEO, and others. One can still wait for XLM to break out, but this post is about speculating on a potential bottom RIGHT NOW. The trade setup would be to buy the breakout of course, but this is about timing a bottom. My last several posts have been an attempt to figure out what's going on in the market, and I'm starting to become convinced that Bitcoin dominance has topped out, and that the next wave up for the entire market should begin sometime this fall. I think it's important to emphasize again that many alts are resembling Bitcoin's second bottom from 2015 in a number of ways. You can read more about that in some of my other posts, or watch my videos.
Looking at the chart, we can see that the last long consolidation period for XLM ended with a slow bleed out (circled in yellow). You can also see that on this particular exchange, XLM experienced a small flash crash event. I drew a potential purple uptrend line from the final bottom in 2017 until now. I also added a purple rising trend line towards the top, to show where price may eventually stall out in the future. I've drawn a speculative squiggle up to $5 by May 2020 (as I think the next major market peak - at the earliest - could coincide with the Bitcoin halving, as we saw with the recent Litecoin peak). The market as a whole is actually starting to look a bit more healthy - even BNB (overinflated this year, in my opinion) is finally correcting, and other alts aren't following it on its ratio decline.
Indicators are also at rock bottom right now. I would not be surprised to see (finally) a major move for this particular cryptocurrency. I've always liked Stellar, particularly because they don't care about price as much as other crypto projects. They care more about financial inclusion and accessibility. I've been worried a bit about the long term survivability of the project, but the recent news about the former Zelle co-founder migrating to a Stellar project re-ignited some of my enthusiasm. Additionally, even though Stellar's correction has been much longer than other cryptos, its decline is in line with most major alts. This includes Ethereum. Actually, ETH's decline from above $1400 to $80 was more severe (factor of 18) than XLM's decline from $0.95 to $0.058 (factor of 16), if this is the bottom here.
Let's also take a look at the XLM/BTC ratio. This is a horrendous looking chart, but if it holds current levels, it would confirm previous long term resistance as support. Just look back to 2016. Price is also very close to exiting the never-ending falling wedge after the flash crash tested the bottom of it as support.
On the XLM/USD chart, you can also see that XLM has retested a very important resistance level from 2017 as support. This is a subtly bullish development as well. There could be some minor downside here, and I'd watch to see if XLM makes a break towards the bottom of the downtrend channel (blue). That would be a bearish development and invalidate my analysis.
Of course, this is not financial advice. I'm just doing my best to analyze what's going on in this crazy market. This is for personal use, educational purposes, and for entertainment only. I am not a professional financial advisor.
-Victor Cobra
Looking at the chart, we can see that the last long consolidation period for XLM ended with a slow bleed out (circled in yellow). You can also see that on this particular exchange, XLM experienced a small flash crash event. I drew a potential purple uptrend line from the final bottom in 2017 until now. I also added a purple rising trend line towards the top, to show where price may eventually stall out in the future. I've drawn a speculative squiggle up to $5 by May 2020 (as I think the next major market peak - at the earliest - could coincide with the Bitcoin halving, as we saw with the recent Litecoin peak). The market as a whole is actually starting to look a bit more healthy - even BNB (overinflated this year, in my opinion) is finally correcting, and other alts aren't following it on its ratio decline.
Indicators are also at rock bottom right now. I would not be surprised to see (finally) a major move for this particular cryptocurrency. I've always liked Stellar, particularly because they don't care about price as much as other crypto projects. They care more about financial inclusion and accessibility. I've been worried a bit about the long term survivability of the project, but the recent news about the former Zelle co-founder migrating to a Stellar project re-ignited some of my enthusiasm. Additionally, even though Stellar's correction has been much longer than other cryptos, its decline is in line with most major alts. This includes Ethereum. Actually, ETH's decline from above $1400 to $80 was more severe (factor of 18) than XLM's decline from $0.95 to $0.058 (factor of 16), if this is the bottom here.
Let's also take a look at the XLM/BTC ratio. This is a horrendous looking chart, but if it holds current levels, it would confirm previous long term resistance as support. Just look back to 2016. Price is also very close to exiting the never-ending falling wedge after the flash crash tested the bottom of it as support.
On the XLM/USD chart, you can also see that XLM has retested a very important resistance level from 2017 as support. This is a subtly bullish development as well. There could be some minor downside here, and I'd watch to see if XLM makes a break towards the bottom of the downtrend channel (blue). That would be a bearish development and invalidate my analysis.
Of course, this is not financial advice. I'm just doing my best to analyze what's going on in this crazy market. This is for personal use, educational purposes, and for entertainment only. I am not a professional financial advisor.
-Victor Cobra
Note
My hypothetical trend line (purple) is being respected beautifully so far Note
Potential short term targets around 7 cents and 9 cents. 9 cents can only be reached if we get a high volume move back above the previous yearly support at $0.071 Note
Officially breaking out of the falling wedge against Bitcoin. Zoomed out:
Note
How about that move, eh? Straight through 7 cents. It didn't quite make it to the downtrend resistance on this move, which is actually a good thing. It means that it can cool off a bit before trying to test it. On some exchanges, I believe it was hit though. Note
Technically we made the first impulse (as forecasted) up to the $0.09 area and back to $0.07. We need to see $0.07 hold to confirm that XLM wants to consolidate and break the downtrend once and for all. On Coinbase, it got all the way to $0.12, but this was likely due to a large market order and stop buys being hit above resistance.Note
It's possible that alts hitting the long term trendline is what caused this move. Good to see a reaction here. This was the main catalyst I was looking for in my recent ETH analysis. I may have drawn the trendline with too big a breadth, so an argument can be made that it's already been hit. Note
Sorry I haven't been around the last few days to update my charts. XLM has retraced further than I hoped for this potential first impluse of a larger bullish breakout. Things aren't looking that good at the moment, but it could just be aiming for a retest of that potential trendline (back in the high 5 cents or low 6 cents area. Hard to really know until XLM officially breaks the downtrend. Hint: It failed yet again. Note
Interestingly, I did actually draw the first impulse failing, causing it to retest support. I was sort of hoping this wouldn't happen though.Note
XLM has dipped a bit below the previous support, but so far buyers have been showing up. Bulls need one of two things to happen:1. BTC stops dumping here and XLM continues to bounce, breaking resistance.
2. The XLM/BTC ratio makes a significant reversal to the upside.
Otherwise, it's game over for most cryptos.
Note
If XLM can close this weekly candle above $0.058, and particularly $0.06, there's a decent chance this was indeed the bottom.Note
I've revised my outlook a bit on the market to make room for a slower growth period. So far, this bottom has held, but I'm not sure about my price targets being reached in such a short timeframe. Time will tell. 
Note
The 200d MA is now around 9 cents, and the downtrend channel resistance is a bit above 8 cents. XLM continues to slowly grind up, even ignoring the swings by Bitcoin. This is a good sign that it may want to test that downtrend again. Note
Perfect rejection from the 200d MA! How about that? What we want to see is XLM consolidate ABOVE the downtrend and break out once and for all. We really don't want to see it roll back over much at this point, and certainly not below $0.071 again. Note
We've gotten a deeper retrace back below the downtrend. We want the weekly candle to at least hold current levels so that we can make another attempt to break the downtrend and the 200d MA. We don't really want a weekly close below $0.071. Stellar needs to confirm a new uptrend and a floor. Note
Making another attempt at the downtrend. We're not REALLY bullish until we break and HOLD above the 200d MA though. Note
The stoch and ultimate oscillator (red) are telling us that we have enough momentum for another big move. It depends a bit on the rest of the market, but XLM has proven to move on its own in the past.
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