Stellar recently made a short-term bullish breakout and is setting its sights on the next area of interest, which lines up with a retracement level. Zooming out to the 4-hour time frame shows that XLM/USD is still in a steady downtrend and is approaching an area of interest or former support.
Applying the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level coincides with this area of interest that might keep gains in check. It’s also in line with the 100 SMA dynamic inflection point.
Speaking of moving averages, the 100 SMA is safely below the longer-term 200 SMA to signal that the path of least resistance is to the downside. In other words, the selloff is more likely to resume than to reverse. The 200 SMA might be the line in the sand for this downtrend as it is also around the top of the area of interest around 0.3500.
Price is currently testing the 38.2% Fibonacci retracement level which could already keep gains in check. Stochastic is dipping into overbought territory to reflect exhaustion among buyers and potential profit-taking that could take Stellar down to the swing low close to 0.1500.
RSI has more room to climb, so the correction could stay in play for a while. The 50% Fib retracement level might also have sell orders waiting around 0.2700-0.2800.
Stellar has connected close to IBM, KlickEx, LeFinance, Flutter Wave, ICICI Bank and Keybase, spurring stronger confidence in its community.
However, the dollar could also get a boost within the week as the FOMC is widely expected to hike interest rates by 0.25%. Apart from drawing demand for the currency, it could also usher in risk-off moves in the financial markets as global tightening jitters return. This typically weighs on investors’ risk sentiment as businesses and consumers could undergo slower activity with higher borrowing costs.