Stellar (XLM) has recently garnered attention among cryptocurrency enthusiasts due to a reverse head and shoulders pattern on its daily chart. The price chart of XLM strikingly resembles the trajectory that XRP followed earlier in the year. The price hovers around $0.452, just below the critical $0.50 neckline, which is typically regarded as a gateway for strong bullish movements. At the year’s start, XRP had breached a similar pattern, resulting in double-digit gains. Fibonacci extension levels for XLM are projected at $0.71 (1.618) and $0.77 (1.786), although substantial buyer interest is necessary to achieve these targets.
Reverse Head and Shoulders on XLM
Analyst ALi Martinez highlighted the reverse head and shoulders pattern forming on the daily chart, with the left shoulder extending back to January, the deep head appearing towards the end of May, and the right shoulder nearing completion early this month. This pattern emphasizes the psychological and technical threshold at $0.50. The distinct neckline provides a clear vision of where a potential momentum shift could be confirmed.
The pattern’s reminder is indeed noteworthy. Earlier this year, the altcoin XRP experienced a similar pattern, with the neckline breaking and the price surging into double digits. For XLM, following this path depends not only on the existence of the pattern but also on the volume at the time of the breakout.
Potential Breakout and Pullback Scenario
For the breakout to be considered reliable, a daily candle close above $0.50 and healthy volume are necessary. If this dual confirmation does not occur, the price might retreat to the $0.40 support level or even the next support threshold at $0.36. These levels correspond to potential pullback points when the pattern does not work as expected.
If the breakout occurs, Fibonacci extension levels will serve as guidance. The $0.71 level, corresponding to the 1.618 extension, stands as the first measured target, while $0.77, matching the 1.786 extension, indicates the next target zone. For the price to advance to these target levels, sustained demand and increased volume are required post-breakout. Otherwise, the price may continue hovering around the pattern’s neckline.
