- July 27, 2023
- Posted by: [email protected]
- Category:
Stellar (XLM) has been closely mirroring the price gains of its counterpart, XRP, ever since the U.S. Securities and Exchange Commission (SEC) partially won its legal battle against Ripple on July 13. Following the court ruling, XLM experienced a remarkable surge, rising by over 60%. However, recent market indicators suggest that caution may be warranted, as the token faces the risk of a potential 30% price decline by September.
The correlation between XLM and XRP has strengthened significantly, with both tokens moving almost in tandem. This interconnectedness is hardly surprising, considering Stellar was founded by Ripple’s co-founder, Jed McCaleb. As XRP rallied around 60% following the legal win, XLM too benefited from the positive sentiment.
Presently, XLM is valued at around $0.154, which is a significant increase from its pre-court ruling levels, but it remains about 20% lower than its local peak of $0.195. As of July 23, the correlation coefficient between XLM and XRP was an impressive 0.95, indicating their synchronized movements.
From a technical standpoint, the recent surge in XLM’s price has led to an overbought situation, with the weekly relative strength index (RSI) hitting its highest levels since April 2021, around 72.5. Such extreme RSI readings often precede price corrections. Furthermore, XLM faces a robust resistance confluence, marked by its 200-week exponential moving average (200-week EMA) and a horizontal line near $0.164.
These technical indicators point to the possibility of a significant price correction in the coming weeks. Should a bearish scenario unfold, XLM could drop towards its 50-week EMA, currently around $0.111, representing a decline of approximately 30% from its present levels. Interestingly, this level aligns with the support XLM held during the May-November 2022 session.
On the other hand, a decisive breakthrough above the resistance confluence could spur XLM’s price towards $0.22 by September, marking a substantial 45% increase from its current value. Notably, this level served as both support and resistance during the period between June 2021 and April 2022.
Investors should remain vigilant, as XLM’s price movements are closely linked to XRP’s trajectory. While the recent legal victory for Ripple has bolstered both tokens, it has also raised the specter of a potential price downturn. As the market unfolds in the coming weeks, traders and holders of XLM will be closely monitoring the developments to determine the token’s future trajectory amidst the evolving regulatory landscape and market sentiment.
