XRP Rival Stellar (XLM) May See Short-Term Pain, Bollinger Bands Signal

The price of the Stellar token XLM is looking at a bearish scenario, despite an impressive start to the year. Recently, XLM, which is considered by many as a beta play on XRP, saw its quotes skyrocket by over 35% to settle at $0.46.

However, this local bull rally for the Stellar token may soon see a short-term downtrend. At least the Bollinger Bands indicator signals such a possibility. Developed by renowned trader John Bollinger, the indicator displays a 20-day moving average and two deviations from it — one to the upside and another to the downside. All three curves together form a price range.

For example, after the recent spike, the price of XLM reached the top of the range at $0.46, which is exactly where the upper band stretches. Typically, this serves as a range boundary and local stop after strong moves.

If that’s the case, then at least a drop to the median is in the cards for XLM, and right now it’s at the $0.382 level, which is 15.45% below the current price.

Alternatively, a drop to the lower band should also be considered, as the previous price action of the Stellar token shows.

In this case, XLM may see its quotes fall as low as $0.31, which is 31.3% down from today’s price. The second scenario may not be as short term, and does not quite fit the logic of XLM’s current price action, as such a drop would wipe out all of the gains of the past few days.

In fact, the upper band has been reached, and the possibility of further growth for the Stellar token is currently lower than the possibility of a correction.

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