Ripple effect? Stellar (XLM) is catching up to XRP ( $1.12 ) 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 ( $1.12 ) fuels XLM price rally again

XLM price has risen over 60% since July 13, when a federal judge ruled that the XRP ( $1.12 ) 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 ( $1.12 ) 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 ( $1.12 ) markets typically mirror one another, given Stellar is a breakaway blockchain payment project founded by Ripple’s co-founder Jed McCaleb. For instance, XRP ( $1.12 ) ’s price has also surged around 60% since the Ripple win.

But XRP ( $1.12 ) 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.

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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.