Technical Analysis: Why I Would Be Inclined to Consider Stellar Lumens

StellarLumens
Credit: iStock.com/William_Potter

Should I Buy Stellar Lumens?

The beginning of 2018 started off on the same note that characterized much—if not all—of 2017. Cryptocurrencies were reaching for the stars as their valuations were ballooning to the stratosphere.

It seemed like this entire sector took a turn for the worse on a dime, and an incredible selloff gripped this market. Cryptocurrency valuations went from around $838.0 billion to $428.0 billion in a span of 10 days. If there was one lesson to be learned by cryptocurrency speculators, it’s that, as fast as some of these cryptocurrencies can rise, they can fall just as fast, if not faster.

This selloff has compounded fears that this asset class was nothing more than a  bubble waiting to pop, and the media outlets are having a field day with it. I am not going to argue with the notion that the asset class is in a bubble. I just believe that higher cryptocurrency prices are needed before bubble reaches its peak.

How can I be both bullish and bearish, at the same time? The answer is quite simple: the price action on a chart of this asset class are parabolic in nature, and I have reason to believe that the parabolic run toward higher prices has further to go.

I am focusing on Stellar Lumens coin because the price chart is very constructive and compelling. This has nothing to do the cryptocurrency’s fundamentals, but the fundamentals are also compelling. Some have even gone as far as claiming that Stellar is the next Ripple.

I want to begin with the XLM price history chart because technical analysis is my wheelhouse. I base all my investment decisions by analyzing the price chart. I am going to attempt to provide a Stellar Lumens price prediction for 2018, and it’s how I am going to try to answer the question, “Should I buy XLM?”

XLM Price History

The moves toward higher XLM coin prices has been an incredible feat to watch, and from a technical standpoint, the price action has been constructive in nature, which means technical analysis can be used to determine the merits of this investment.

The following Stellar Lumens Coin chart has been annotated in order to highlight the constructive price action that was responsible in creating and sustaining the bullish trend in this cryptocurrency:

XLM Price History Chart

Chart courtesy of TradingView.com

This Stellar Lumens price chart illustrates that for this first half of 2017, the price was contained beneath a s significant level of price resistance, which resided at $0.0035, creating a multi-month base.

On April 2, 2017, XLM coin prices broke above this level of resistance, and this marked the beginning of an epic moves toward higher prices, where the Stellar Lumen coin price manage to reached a high of $0.98 on January 4, 2018. Just to quantify for those wondering, this was a 27,900% move.

This epic moves toward higher prices was technically sound because it was constructive in nature. Constructive price action consists of an alternating wave structure, which is made up of impulse waves and consolidation waves.

The waves highlighted in green are the impulse waves, and these waves mark the segment in the bullish trend where price stages sustain a move toward higher prices.

The waves highlighted in purple are the consolidation waves, and these waves mark the segment in a bullish trend where the stock price stages a correction. Price corrections are necessary in order to restore the health of a trend, so that trend can continue.

In essence, these waves, within an alternating wave structure, create the building blocks that create and sustain a bullish trend.

I believe that the Stellar Lumens coin price is currently within the confines of an impulse wave, which means a sustained move toward higher prices is currently in development.

Stellar Lumens Potential 2018

Taking a closer look at this impulse wave will give a clue to the potential price potential for Stellar Lumens coins in 2018.

So as a result, I have provided the following XLM price chart, which focuses on the current impulse wave that currently in development, which I believe will give some insights into XLM’s possible future value.

XLM price chart

Chart courtesy of TradingView.com

This XLM coin price chart illustrates that the bullish trend captured by he impulse wave, which has been in development since mid-October, has been within the confines of an ascending channel.

This technical price pattern contains two parallel upward sloping trend lines that represent levels of price support and resistance. The upper trend line, which represents resistance, was crated by connecting a series of higher highs, while the lower trend line, representing support, was created by connecting a series of higher lows.

Due to the bullish nature of this pattern, as long as the XML price is contained within the ascending channel, higher prices will prevail over time.

I have reason to believe that higher prices are likely going to occur sooner rather than later because the moving average convergence/divergence indicator has just swung into bullish alignment.

In order to stage a sustained move toward higher or lower prices the applicable momentum is required. The MACD indicator is a trend following momentum indicator that distinguishes whether bullish or bearish momentum is influencing the trading action. bullish momentum suggests that higher prices are likely to prevail, while bearish momentum suggests that lower prices are likely to prevail.

A bullish MACD cross was just generated, and it suggests that the Stellar Lumens coin price is now geared toward higher prices, and as a result, I have the inclination to believe that resistance outlined by the ascending channel is going to be tested. Resistance currently resides at $2.93, and due to its upward slope, the longer it takes to get to this trend line, the higher the XLM future value, and the Stellar Lumens price prediction for 2018 becomes.

The Process of Buying Stellar and the Meaning of the Partnership Between IBM and Stellar

Now that I have gone over the technical picture, let’s take a look at the fundamentals through the eyes of my coworker, who has already done an excellent job outlining the merits of Stellar Lumen.

Information on the in and outs on buying stellar have been provided by my colleague Mohan Garikiparithi, who did an excellent job in a report titled, “How to Buy Stellar Lumens (XLM) Currency?

Mohan did another excellent job outlining the applicable applications of Stellar Lumens, in a report titled, “Stellar Lumens Applications: Businesses That Accept XLM Currency.” That report also included the implications of the XLM news of the deal with International Business Machines Corp. (NYSE: IBM) and Stellar and how it substantiated this coin as a player among giants like Bitcoin, Ethereum, and Ripple.

Analyst Take

The answer to the question I posted earlier, “Should I buy XLM coins?” is “possibly.” Given that I am a technical analyst, this view is based on the price action which was generated on the Stellar Lumens price chart.

This potentially bullish stance coincides with my view that we have not yet seen the peak in the cryptocurrency bubble. I have a feeling that this sector is going to move a lot higher before everything is said and done.