In the fast-paced world of cryptocurrencies, the spotlight now falls on Stellar (XLM) as it navigates a consolidation phase after witnessing a pullback from its yearly high in July. Despite this retracement, a closer examination of the daily and weekly timeframes paints a picture of an imminent breakout from the current pattern. If this scenario materializes, it could potentially pave the way for XLM to surge to new heights in the coming weeks.

Stellar’s Period of Consolidation and Historical Context Zooming in on the weekly timeframe, XLM managed to shatter a significant barrier in January when it broke free from a long-standing descending resistance line. This line had steadfastly held its ground for an impressive 616-day duration. Following this breakout, XLM rallied above the $0.105 resistance level, reaching a triumphant new yearly pinnacle of $0.195 in June. However, the subsequent price action took a downturn, marked by the emergence of long upper wicks and bearish weekly candlesticks.

The key resistance level to conquer now lies at $0.23, while the nearest long-term horizontal support stands strong at $0.105.

Weekly RSI and Signals on Trend Direction A closer look at the weekly Relative Strength Index (RSI), a vital momentum indicator, reveals a reading that has yet to make its intentions fully clear. In the realm of technical analysis, readings above 50 paired with an upward trajectory signal a bullish advantage, while readings below 50 point towards the opposite scenario. Presently, the RSI is in a state of descent but is comfortably positioned above the 50 mark. This contradictory evidence leaves us without a definitive verdict on the overall trend.

Daily Timeframe and Insight from Elliott Wave Analysis For a more granular perspective, we delve into the daily timeframe, employing the sophisticated tool of Elliott Wave Theory. This approach, favored by technical analysts, offers insights into long-term price trends and investor sentiment, aiding in forecasting market dynamics.

As per the Elliott Wave analysis, XLM’s price seems to be riding the crest of the fourth wave in a five-wave upward trajectory (designated as the “white” wave). This fourth wave has taken on the shape of a triangle formation, a pattern often considered the prime contender for concluding wave four. With the price inching closer to the apex of this triangle, a decisive move is primed to unfold.

The big question is whether this breakout will confirm the continuation of the bullish trend, signaling the initiation of the fifth wave. In this scenario, XLM could be in for an impressive 60% ascent, setting its sights on breaching the next resistance point at $0.230. This target materializes from the calculation of the 3.61 extension of the first wave.

Alternative Scenarios and the Road Ahead Conversely, if the price takes a downward trajectory, revisiting the $0.130 range could be a conceivable outcome. It’s essential to underscore that such a move would not render the bullish scenario null and void. However, the narrative would change if the price plunges below the high of the first wave, set at $0.118. Such a breach could open the door to another 35% dip, with XLM potentially descending to the $0.09 territory.

Final Assessment: Optimistic Outlook Tempered with Pragmatism In conclusion, the prevailing outlook for XLM leans towards a bullish trajectory. The projected 60% surge towards the next resistance level at $0.23 stands as a credible possibility, given the insights gleaned from the Elliott Wave analysis.

However, in the dynamic world of cryptocurrencies, it’s imperative to approach predictions with caution. A downward plunge below the critical threshold of $0.118 might tip the scales and usher in a 35% retracement to $0.09. As the impending breakout from the triangle formation looms on the horizon, the market’s reaction will serve as the ultimate litmus test, determining the trajectory that Stellar’s journey will take in the immediate future.