Stellar was unable to hold on to its earlier gains and was rejected at the top of its triangle resistance. Price slumped back to support and broke even lower, reading the 0.1930 area.

XLM bounced off this region and is currently pulling back to the 50% Fibonacci retracement level on the breakout move. A larger correction could last until the broken triangle support around the 0.2200 mark and moving averages’ dynamic inflection points.

On the subject of moving averages, the 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. However, the gap between the two indicators has narrowed significantly to indicate a possible bullish crossover. If that happens, buying pressure could return and put the price back above the Fibs.

XLM/USD Chart - TradingView

RSI is on the move up to indicate that buyers have the upper hand for now. This oscillator has plenty of room to climb before hitting overbought levels, which means that bulls could stay in control for a bit longer. Similarly stochastic is just pulling up from the oversold area to show a return in bullish momentum.

Recall that Stellar previously drew some support from news that IBM will be using its blockchain to power a cross-border payments network. According to a summary on their website:

The solution uses digital assets to settle transactions — serving as an agreed-upon store of value exchanged between parties — as well as integrating payment instruction messages. It all means funds can now be transferred at a fraction of the cost and time of traditional correspondent banking.

However, Stellar also seems to have caved in along with most of its cryptocurrency peers to the selloff around the middle of the week when it was rumored that Goldman Sachs is ditching is plans to create a bitcoin trading desk.

Images courtesy of TradingView

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