Stellar recently broke out of its symmetrical triangle to signal that further gains are in the works. Price is stalling around the 0.095 mark as it awaits more buying momentum.
This could either be a bullish flag pattern or a sign that a correction might follow. Applying the Fib tool on the latest swing low and high on the 1-hour time frame shows that the 61.8% level is close to the broken triangle resistance that might now hold as support. However, the 100 SMA is holding as dynamic support as well, possibly pushing for a break past the 0.096 mark that would confirm that this is a continuation signal.
The 100 SMA is above the longer-term 20 SMA to confirm that the path of least resistance is to the upside. In other words, resistance is more likely to break than to hold. If so, Stellar could see a rally that’s the same height as the mast of the flag, which spans around 0.0800 to 0.095.
RSI is pointing down, though, indicating that selling pressure is still in play. This could keep the correction going, at least until the nearby Fib levels at 0.087 or 0.085, which are 38.2% and 50% respectively. Stochastic is on the move up to indicate the presence of bullish momentum but the oscillator is nearing the overbought zone as well. Turning lower could indicate that bears are just getting started.
Stellar broke higher on indications that a project with IBM is about to be announced soon. Jesse Lund, Head of Blockchain Development and Digital Currencies at IBM, will “be keynoting a major event in Singapore with [his] friend Jed McCaleb” to discuss the IBM-Stellar partnership and “a special announcement about the product and… what it includes.”
With that, it’s understandable that traders are rushing to set their long positions for fear of missing out on strong rallies that might follow. For now, profit-taking appears to be keeping gains in check while traders wait for actual developments.
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