XLM price has been in a strong freefall in the past few days as the crypto market plunged. Stellar Lumens token dropped from a high of $0.5183 to the current $0.40. This article explains why the Stellar price may be on the cusp of a strong surge in August.
XLM Price Technical Analysis
The daily timeframe shows that the XLM price has formed several highly bullish patterns in the past few months. It initially formed a double-bottom pattern at $0.2177 and a neckline at $0.3350, its highest level in May this year.
Stellar price also formed a golden cross pattern as the 50-day and 200-day moving averages crossed each other on July 15. A golden cross is widely seen as one of the most bullish chart patterns in technical analysis.
Most recently, the Stellar Lumens price formed a bullish flag pattern, which comprises a vertical line and a descending channel. It has also formed a highly popular bullish pennant and a falling wedge chart pattern. A wedge is made up of two falling and converging trendlines.
Additionally, it formed a bullish engulfing pattern, where a big blue candlestick follows a small bearish one. There are also signs that it has moved into the second phase of the Elliot Wave pattern.
This phase is followed by the third wave, which is usually the longest and the most bullish. Therefore, the most likely scenario is where it jumps to the year-to-date high of $0.5183, up by 30% from the current level.
A move above that level will point to more gains to $0.6357, up by 60% above the current level. On the other hand, a drop below the double-bottom’s neckline at $0.3351 will invalidate the bullish view.
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The Bullish Case for Stellar Lumens
Stellar Lumens has some solid fundamentals that will push it higher in the coming months. First, the token will benefit from the potential crypto bull run, which will happen once Bitcoin makes a strong breakout above its all-time high, as we predicted here.
Second, Stellar is often seen as an XRP cousin because it was started by Jed McCaleb, Ripple’s co-founder. It often has a close correlation with XRP, meaning that it rebounds as the XRP price targets the resistance at $5.
Third, Stellar’s stablecoin network is gaining momentum. Data compiled by Artemis shows that the stablecoin supply jumped by 16% in the last 30 days to $200 million.
The number of stablecoin addresses jumped by 24% to 9.8 million, while the adjusted transaction volume soared 83% to $1.98 billion. Stellar’s stablecoin growth is notable since its main goal is to simplify payments.
The other potential catalyst for the XLM price is that its addresses, transactions, and fees are surging. Its addresses rose by 78% to 514,714, while its transactions jumped by 12% to 80.5 million.
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