Disclaimer: The findings of the following analysis are the sole views of the author and should not be considered investment advice.
by Stellar [XLM] Efforts to weaken the resistance of the four-month trend line (white, dashed) paid off as the bulls broke it to support after their recent rally. The latest market resurgence involved a rising wedge structure, which attempted to retest the $0.125 high.
A compelling close above its current pattern would position it to nullify bearish trends. Bulls need to increase buying volumes to maintain their ongoing buying streak. At the time of writing, XLM was trading at $0.124, up 3.36% in the last 24 hours.
XLM Daily Chart
XLM’s previous downtrend exposed four-month trendline support (previous resistance) on the daily chart. However, after falling to a 20-month low on July 13, buyers regained momentum.
As a result, price action bounced above its short-term EMAs. Even so, the 20 EMA (red) had yet to break above the 50 EMA (blue) and confirm a strong bullish rally. Such a cross could increase the chances of a bearish cancellation.
If the $0.12 resistance rekindles selling power, the alt could see a bearish phase in the pattern. However, morning stars could help the bulls maintain their advantage. A close beyond the $0.12 level would open a door for a test of the $0.135 level.
However, a potential bearish rally to the $0.12 mark may delay short-term recovery prospects. Any nearby point below the pattern could see a subdued phase near the Point of Control (POC, red).
The Relative Strength Index took a bullish stance, especially after the 57 indicator broke into immediate support. A position above this level would reflect a favorable environment for continued growth.
Additionally, the OBV resonated with increasing buying pressure, but was unable to repeat the price action at higher highs in the last week. Thus, any reversals in the OBV could confirm a bearish divergence.
The DMI lines were showing a strong buying edge while the -DI was still looking south. However, the ADX showed an essentially weak directional trend for the XLM.
Given the bullish wedge structure approaching the $0.125 ceiling, sellers would like to press their advantage. A close above this resistance may encourage a bearish reversal. The objectives will remain the same as discussed.
Finally, investors/traders should factor in the broader market sentiment and chain developments to make a profitable move.