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Stellar (XLM) could be gearing up for a major breakout as a classic technical pattern takes shape on the charts.
A textbook inverse head and shoulders pattern appears to be shaping up on Stellar's four-hour chart, fueling speculation of a potential move ahead.
The inverse head and shoulders pattern is often viewed as a trend reversal signal, particularly after a prolonged downtrend or consolidation period. It consists of three troughs, the main one (the head) being the deepest, and the two outer troughs (the shoulders) being shallower and almost equal in depth.
In a recent tweet, crypto analyst Ali highlighted the buildup of this pattern, noting that Stellar (XLM) may be forming an inverse head and shoulders pattern.
At press time, XLM was up 2.73% in the last 24 hours to $0.2611. The cryptocurrency market was slightly higher early Wednesday as investors waited for the Federal Reserve's interest rate decision. Investors will also be watching Powell's speech following the decision for signals about future interest rate decisions and the state of the U.S. economy.
Ahead of the Fed's rate decision, the majority of cryptocurrencies, including Stellar, were trading in green.
Breakout ahead?
Stellar (XLM) has steadily declined following an impressive rally to highs of $0.297 on April 26.
The drop caused XLM to drop below the daily SMA 50 at $0.262, reaching lows of $0.2519 on May 6 before rebounding.
Currently, bulls are attempting to bring back XLM price above the daily SMA 50 at $0.262. If this is successful, Stellar might aim for higher targets.
According to Ali, if the $0.24 support holds, it could complete the right shoulder and set the stage for a breakout toward $0.39, a move that would represent about a 50% upside from current prices.