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Stellar’s Protocol 20 Upgrade Has A Surprising Effect on XLM

source-logo  coinedition.com 21 September 2023 14:55, UTC

On September 20, Stellar (XLM) completed its protocol 20 upgrade, geared at introducing support for businesses and developers building on the Stellar network. According to Stellar, the upgrade was a complex one, and by far the biggest since the project launched.

While the upgrade on Wednesday was only a testnet version, Stellar in its blog post on September 18, revealed that developers may now access support for Soroban smart contracts on the network.

Stellar’s Testnet Fails to Move XLM

For the unfamiliar, Soroban smart contracts are built on Stellar’s network to enable the smooth functioning of decentralized applications (dApps). Meanwhile, Stellar also disclosed that the protocol 20 upgrade mainnet may take six weeks.

Following the upgrade, XLM’s price dropped by 4.17%. This was a little bit surprising as most of Stellar’s upgrades have resulted in a positive move for XLM. At the time of writing, XLM exchanged hands at $0.11.

XLM 24-Hour Price Performance (Source: CoinMarketCap)

Bulls Have No Defense

Turning to the XLM/USD 4-hour chart, there has been a lot of selling pressure lately. This sell-off first sent XLM downwards to $0.113. Then, the next red candle pushed XLM to $0.112. With increasing bearish momentum, it is unlikely that XLM will recover soon.

To make matters worse, the Awesome Oscillator (AO) was down to -0.002. Basically, a positive reading of the AO implies that the 5-period Moving Average (MA) is greater than the 34-period.

Since XLM’s AO was negative, it means that the 34-period MA was greater than the 5-period MA. Also, indications from the 4-hour chart showed that the AO had red bars that were hitting lower lows. So, XLM’s momentum may continue to decrease.

If the AO trends lower again, then traders looking to gain from an upside may need to find entries around $0.10. This notion was further reinforced by the Relative Strength Index (RSI). At press time, the RSI was 27.19— an obviously oversold zone.

Therefore, if the bearish momentum continues, then XLM’s RSI could drop below 25.00. But at this point, the trend may reverse. However, that will only happen if buyers come into the picture, and possibly drive XLM back to $0.12.

XLM/USD 4-Hour Chart (Source: TradingView)

In the interim, bulls may not be able to defend XLM. Thus, the next targets for the token could be between $0.10 and $0.09.

Disclaimer: The views, opinions, and information shared in this price prediction are published in good faith. Readers must do their research and due diligence. Any action taken by the reader is strictly at their own risk. Coin Edition and its affiliates will not be liable for direct or indirect damage or loss.