The over-extension and the consequent correction is the sole reason why we should be looking for sell opportunities in lower time frame. Like XRP, XLM lower lows tested previous resistance now support before retracting as last week closed.
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Will this week’s prices test those levels? Of course that is the quip we must ask ourselves but in my own opinion, that will be the lower limit from which this week’s price action might end up testing unless something out of the norm happens to inject bull momentum.
Lest we forget, our immediate resistance will be at $0.73 or this week’s highs because anyway, the current price action is still oscillating within last week’s high low and it won’t change anytime soon.
One thing though, without stating the obvious, the retest will be complete if the middle BB is tested and a bullish candlestick prints from around this price zone.
In the daily chart, there are three things we should watch. The first is January 16 bear candlestick and its high lows, the second is the influence of $0.30 and the 3rd is if price action will be maintained within the 38.2% and 61.8% Fibonacci retracement levels.
We mentioned this before. As long as XLM prices are maintained below January 16 highs and middle BB, bears are in charge.
Furthermore, the waving of price in the daily chart makes it incredibly hard to turn a profit and that is why entry sell entries in the 4HR chart remains conditional.
See that inverted head and shoulder pattern in our entry chart? If so, we can see that momentum is being injected as buyers continue ramping up their longs as they head towards the minor resistance trend line.
That’s the main liquidating line and a separator. It’s rosy right? But first, if we are to buy, buyers must break and close above the 38.2% Fibonacci retracement at $0.55. From a bottom up, that means buyers would have closed above the middle BB in the daily chart.