Yerevan (CoinChapter.com) – Stellar’s native token XLM gained bullish momentum after rallying more than 30 percent. The token traded at $0.42 in the European session Monday after briefly dropping to $0.27 on Thursday.
Bullish outcome?
The XLM token has bounced back on Monday, using its 200-day simple moving average (SMA-200: yellow wave on the chart) as its primary support. Once the Stellar token achieved fresher local lows, traders went in to buy the asset, preventing the price from falling further down.
Another technical indicator, the relative strength index (RSI), supported the bullish continuation. The indicator determines whether the asset is overbought or oversold. Stellar’s RSI reading is at approximately 30, with an upward trend, suggesting a bullish outcome is possible on an oversold XLM bounce in the upcoming sessions.
Moreover, Stellar takes a much ‘greener‘ approach, as opposed to Bitcoin’s proof-of-work protocol. Seeing how the ecological repercussions were the declared reason for Mr. Musk’s change of heart, ‘greener’ tokens might get more attention from traders.
Bearish Phase Ahead For Stellar?
XLM was previously trading within a bearish pattern dubbed as the rising wedge (the two-line formation on the chart above). The setup indicated a pattern reversal ahead. If Stellar moves back into the pattern, its bias would still be bearish (please refer to the chart above).
Moreover, the token painted a death cross on Saturday after its 20-day exponential moving average (EMA-20: green wave on the chart above) fell below the 50-day simple moving average (MA-50: blue wave). The crossover predicts a bearish phase and further loss in value until the short-term moving average restores above the long-term moving average.
Multiple coins and exchange tokens, including Bitcoin, painted a similar death cross as the sell-off pressure in the crypto market continued to remain.
Read more: Crypto Exchange Tokens Suffered Worst During Elon Musk Dump
What affected Stellar?
The avalanche of the cryptocurrency prices for both Bitcoin and altcoins started on May 13. Elon Musk, the chief executive of Tesla, announced the company would no longer accept Bitcoin (BTC) payments for their electric vehicles. Furthermore, he hinted that Tesla could also dump its entire BTC holdings.
The billionaire did not act on the whim but did the damage. Bitcoin declined drastically only to receive another incentive On May 19. The People’s Bank of China severed all ties with the crypto-market within the country. All association with it would be illegal from that point on.
Read more: Elon Musk Caused Bitcoin Dump, But Hawkish Fed Minutes Could Accelerate It
Many traders lost faith in the crypto market and started panic selling the alpha coin and altcoins, including Stellar. As a result, the prices fell across the board. The crypto market cap went from $2.08 trillion on May 12 to $1.50 trillion in Monday’s European session. Supported by its SMA-200, it gained bullish momentum, as investors were not only panic-selling but also anticipating profit and “buying the dip.”
Stellar’s XLM is currently in an ambiguous position. The token could continue its current bullish trend and recover the losses. It could also follow the technical indicators, and the rest of the market is exhibiting bearish tendencies in the upcoming sessions.
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