Stellar (XLM) price rallied 15% against its arch-rival XRP (XRP) two days after the XLM/XRP pair hit an all-time low of 0.181 XRP.
Notably, the XLM/XRP pair rose to its intraday high of 0.20 XRP on March 31, a move that coincided with a decoupling between Stellar and XRP in the US dollar market. For example, the price of XLM is up more than 11% since March 29 against XRP’s 3% decline.
XLM Price Targets 10% Gains Against XRP in April
On a broader time frame, XLM is down 89% from its January 2021 high of 1,655 XRP. Interestingly, the spike formed a month after the US Securities and Exchange Commission sued Ripple. for the alleged sale of securities in the form of XRP tokens.
The SEC’s case against Ripple is nearing completion and legal experts are in favor of a victory for Ripple.
Meanwhile, XLM continues its long-term downtrend against XRP, although a bounce is anticipated in April.
On the daily chart, the current XLM/XRP rally started at its multi-month downtrend line resistance, which constitutes a descending channel, as shown below.
The pair is now trying to turn the 0.198-0.207 XRP resistance range into support to target a rally towards 0.22 XRP in April, up 10% from current prices.
XLM looks similarly bullish against the US dollar
Stellar price rallied more than 25% in March to hit $0.113, its highest level in four months. XLM is now positioned for a possible near-term price correction in the first week of April, followed by a rally to new yearly highs.
At the core of this bullish outlook is a classic technical pattern called the “cup with a handle.” The pattern is formed when the price experiences a U-shaped, or cup, rally, followed by a period of consolidation, ie the handle, all below a common resistance level called the “neckline.”
In the meantime, it resolves after the price breaks above the neckline and rises as much as the distance between the bottom of the cup and the neckline.
Notably, XLM has been painting a similar cup and handle since November 2022. XLM/USD entered the pattern breakout stage during its price boom in March and is now 20% away from hitting the breakout target near USD. 0.131.
However, XLM’s daily RSI has entered its overbought zone above 70, suggesting a period of consolidation or correction in the first week of April. As such, the XLM price risks correcting towards its neckline around $0.095, 12% below current price levels.
Ideally, traders view these corrections as a method of analyzing the strength of the breakout of the cup with handle pattern. Therefore, the breakout scenario will be confirmed when the price rebounds from the neckline of the pattern and is accompanied by increased trade volumes.
Conversely, if the price closes below the neckline on increased volumes, you risk invalidating the cup and handle breakout scenario entirely.
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