The analysis today will be over Stellar Lumens (XLM). We will be reviewing its current price action utilizing multiple timeframe analysis with Goichi Hosada’s Ichimoku Kinko Hyo system.
Stellar (XLM) Weekly Ichimoku Chart
The chart above is XLM’s weekly Ichimoku chart. There are relatively few things on the weekly chart that would indicate bullish sentiment – the exception would be the volume. I want to touch on the volume side of this cryptocurrency first. Unless something drastic occurs, XLM will close the weekly candlestick with its biggest monthly gain since the week of September 16th, 2019. The currently weekly volume would also be the highest since the week of September 16th. Another positive sign is that this is the 6th consecutive week, where XLM has a close greater than the open. The current win streak is the single longest winning streak for XLM in its history. While this does sound bullish (it is), we must put it into context. If XLM were to close at its present value (0.07959), then that would represent a +37.15% gain from six weeks ago. The major problem here is that even though these six weeks have yielded a substantial rise, it has failed to close above the VPOC at 0.0827.
The only bullish condition that exists for XLM on the weekly Ichimoku chart is price trading above the Tenkan-Sen. The Tenka-Sen is well below the Kijun-Sen, and both of those averages are below the Kumo. Both the current Kumo and Future Kumo show thick Clouds indicating significant trending strength to the downside, with almost no relief ahead. The prolonged down drive we are in is the 18th consecutive week where the weekly candlestick has traded below the Kijun-Sen, and it’s been just as many weeks since XLM has tested that key level. I am anticipating a retest of that level soon – and likely, we could see that happen next week. I am very cautious about how high XLM trades, though – another weekly close higher brings XLM into what Gann called the ‘death zone.’ The ‘death zone’ is a 49-cycle that often terminates trends. When comparing the RSI and Composite Index indicators against each other, we can observe some significant bearish divergence between the RSI and the Composite Index with the RSI printing lower highs but the Composite Index printing higher highs.
Stellar (XLM) Daily Ichimoku Chart
While the weekly chart shows extreme long term bearish and short term overbought conditions, the daily chart is showing us something different. What we are witnessing on the XLM’s daily chart is a perfect example of how an ideal bullish Ichimoku breakout setup should look. All of the conditions for the ideal Ichimoku bullish breakout setup have been fulfilled. The Tenkan-Sen, Kijun-Sen, price and the Chikou Span are not inside the Cloud. The Tenkan-Sen is above the Kijun-Sen with price above both. The Future Senkou Span A is above Future Senkou Span B. And, most importantly, both price and the Chikou Span have broken out above the cloud. Contributing even more to the bullishness of this setup is the prior breakout selling off to test the top of the Cloud (Senkou Span B) as support – which is where support has been found. We could observe a substantial and powerful move higher if the aggregate crypto markets also turn bullish.