Ripple effect? Stellar (XLM) is catching up to XRP price gains
Stellar (XLM) is basking in the glow of Ripple’s partial win against the U.S. Securities and Exchange Commission (SEC), up around 60% since the court ruling on July 13.
XRP fuels XLM price rally again
XLM price has risen over 60% since July 13, when a federal judge ruled that the XRP sales on public exchanges did not break U.S. securities laws. Still, the token is down about 20% from its local peak of $0.195 and was changing hands for about $0.154 on July 23.
The period of XLM’s price rise has appeared alongside the token’s growing positive correlation with XRP on the daily timeframe. As of July 23, the correlation coefficient between the two assets was 0.95, suggesting they are moving in a near-perfect tandem.
The price trends in XLM and XRP markets typically mirror one another, given Stellar is a breakaway blockchain payment project founded by Ripple’s co-founder Jed McCaleb. For instance, XRP’s price has also surged around 60% since the Ripple win.
But XRP price risks dropping approximately 40% by September, which will likely put XLM under similar bearish stress.
XLM most overbought since April 2021
From a technical perspective, the latest XLM price rally has pushed the market’s weekly relative strength index (RSI) to its most overbought levels since April 2021.
Related: XRP price searches for a fresh bullish catalyst to trigger a move above $1
As of July 23, XLM’s weekly RSI was around 72.5. Additionally, the token trades near a strong resistance confluence comprising of its 200-week exponential moving average (200-week EMA; the blue wave) and a horizontal line (purple) near $0.164.
The indicators raise XLM’s prospects of undergoing a sharp price correction in the coming weeks.
In this bearish scenario, XLM price could decline toward its 50-week EMA (the red wave) near $0.111 by September, down 30% from current price levels.
This level also coincides with XLM’s support during the May-November 2022 session.
Conversely, a decisive close above the resistance confluence could have XLM/USD rally toward $0.22 by September, up 45% from current price levels. This level served as support and resistance in June 2021-April 2022.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Source: Cointelegraph.com
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