Stellar Sees Price Drop to a 3-Month Low – What Contributed to this Decline?

Crypto News- On October 9, the price of Stellar (XLM) experienced a significant drop as it broke out of a long-established descending triangle pattern that it had been trading within since July 13. This decline pushed the XLM price below the crucial $0.110 support level, solidifying the bearish nature of this pattern. By October 12, XLM had reached a new 90-day low at $0.101, and the daily Relative Strength Index (RSI) signaled bearish momentum by falling below the 50 threshold.

Stellar Sees Price Drop to a 3-Month Low – What Contributed to this Decline?

In recent developments, the Stellar Development Foundation and Certora introduced advanced security support for Soroban, a smart contract platform on the Stellar network. Notably, Soroban is the first platform powered by WebAssembly (WASM) to receive the endorsement of Certora, a tool traditionally associated with the Ethereum Virtual Machine (EVM).

One potential factor contributing to this price decline was the presence of an ascending parallel channel within the triangle. As channels often contain corrective movements, the previous upward trend within it was expected to reverse, leading to a decline.

If XLM’s descent follows the entire height of the triangle, it could potentially reach just below the critical $0.076 horizontal support area, indicating a 30% drop from its current price. However, it’s essential to note that a breakout above the triangle’s resistance trendline would negate this bearish scenario, potentially shifting the trend to a bullish one and propelling XLM to a 30% increase to $0.140.