Disclaimer: The findings of the following analysis are the authors’ sole opinions and should not be considered investment advice.
Stellar’s [XLM] Attempts to weaken the four-month trendline resistance (white, dashed) came to fruition as the bulls turned it over to support after their recent rally. The latest resurgence in purchases brought with it a rising wedge structure, one that sought to retest the $0.125 ceiling.
A compelling close above the current pattern would position it to nullify bearish tendencies. The bulls need to ramp up their buying volumes to maintain their sustained buy streak. At the time of writing, XLM was trading at $0.124, up 3.36% in the past 24 hours.
XLM daily chart
XLM’s previous downtrend marked the four-month trendline support (previous resistance) on the daily chart. However, after falling to a 20-month low on July 13, buyers have regained their momentum.
As a result, price action jumped above the EMAs in the short term. Still, the 20 EMA (red) has yet to come out bullishly above the 50 EMA (cyan) confirming a robust rise in the buying advantage. Such a crossover could increase the likelihood of a bearish invalidation.
Should the USD 0.12 resistance reignite selling power, the alt could see a slow phase within the pattern. However, the morning star candlesticks can help the bulls maintain their advantage. A close above the USD 0.12 level would open a door for testing the USD 0.135 level.
However, a likely bearish rally near USD 0.12 could slow down the near-term recovery outlook. Any close to the pattern could see a slow phase near the checkpoint (POC, red).
The Relative Strength Index took a bullish stance, especially after the 57th mark flipped to immediate support. A position above this level would reflect a favorable environment for continued growth.
In addition, the OBV resonated with increasing buying pressure, but failed to replicate price action on higher highs from the past week. So any reversal on the OBV could confirm a bearish divergence.
The DMI lines predicted a strong buying advantage while the -DI still looked south. Nevertheless, the ADX showed a significantly weak directional trend for XLM.
Given the rising wedge structure approaching the $0.125 ceiling, sellers would be trying to take advantage. A close above this resistance may encourage bearish invalidation. The goals remain the same as discussed.
Finally, investors/traders need to consider broader market sentiment and developments in the chain to make a profitable move.