The latest altcoin technical analysis suggested that a correction was on the horizon following a market-wide surge. Now, it looks like the market is, in fact, retracing before there is a continuation of the bullish trend.
In a matter of six days, Stellar moved up 58 percent to shape the right shoulder of the head-and-shoulders pattern that has been forming in the 3-day chart since December of last year. Now that XLM has broken above the neckline of the pattern, at $0.135, a 45 percent move to the upside could be expected to happen in the near future. This target was calculated by measuring the height from the neckline to the head of the formation.
The head-and-shoulders pattern will be invalidated if XLM trades below the right shoulder at $0.089.
On XLM’s 12-hour chart, a long-legged doji formed at the top of the bullish trend. This type of doji indicates that Stellar’s open price was virtually equal to the close price and it could be signaling a pullback.
If the support level at $0.135 is broken to the downside, then XLM could retrace to the next level of support at $0.12.
On the 4-hour chart, it seems like XLM could be trading inside a descending parallel channel. If it is able to trade below the middle line of the channel and the 7 moving average it could fall down to test the 30 moving average that is currently sitting at $0.115.
Conversely, a break above the parallel channel could push Stellar’s market valuation higher.
Since early April, NEO was trading inside a descending parallel channel that took it as low as $8.41 on May 10.