Stellar faced a tough time trying to surpass the $0.2 mark. This was because the US dollar was strong, affecting Stellar’s performance, and the support level where it previously bounced back might not be strong enough if the market goes there.
The US dollar gained strength during the summer, which not only impacted traditional financial markets but also had a negative effect on the cryptocurrency market, including Stellar (XLM/USD). Even though Stellar briefly reached $0.2 after forming a triple bottom pattern, it didn’t sustain the momentum and remained in a bearish trend.
Bearish market rallies can be misleading, causing traders to think a significant reversal is imminent, but they often turn out to be short-lived spikes. In simpler terms, for Stellar to rise above $0.2, the US dollar would need to lose some of the strength it gained during the summer.
There are a few ways the US dollar could weaken. One is if bond yields decrease and bond prices rise, as a recent bond market selloff led to increased demand for the US dollar. Another factor could be a stabilization or even a decline in crude oil prices, as the summer’s sharp oil rally contributed to lower stock prices and a stronger dollar. Additionally, the Federal Reserve’s decisions and messages play a significant role in the dollar’s movement.
Returning to Stellar, if it can’t break past the $0.2 resistance, its price might fall back to the support level where the triple bottom pattern was formed. If that happens, it’s doubtful that the support will hold.