Stellar (XLM) has recently showcased impressive bullish momentum, marking a significant breakout from a descending wedge pattern. This surge, which pushed the price from a low of $0.32 on December 30 to a recent high of $0.51, has captured the attention of crypto enthusiasts and analysts alike. However, despite this strong upward movement, XLM is now encountering resistance at crucial horizontal levels, suggesting that short-term consolidation may be on the horizon before the next significant move.
XLM Price Action: Key Breakout and RSI Signals
Looking at the daily chart of XLM, the breakout from the descending wedge pattern stands out as a pivotal moment. The upward price movement aligns with a recovery in the Relative Strength Index (RSI), which indicates a surge in buying interest. As the RSI approached overbought conditions, however, the price experienced a downturn, signaling that the market may be entering a period of consolidation.
From an Elliott Wave perspective, the recent price structure suggests that XLM has completed a five-wave impulse, followed by a corrective ABCDE pattern. This correction found its bottom around the $0.32 level in late December, which led to the subsequent upward movement. If the Elliott Wave count holds true, XLM could be in the early stages of a new impulsive wave, with further upside potential on the horizon.
Resistance and Potential Consolidation
Despite the breakout, XLM is now facing significant horizontal resistance in the $0.45–$0.50 range. Historically, this zone has acted as a major supply area, and it could prove challenging for the price to break through. If XLM can close above this resistance range, it would confirm the continuation of the upward trend, with potential for further gains.
On the other hand, failure to clear this resistance could lead to a retest of key support levels around $0.40. This support zone has proven to be a strong foundation for the price in recent weeks, and a bounce from this level would signal that the bullish trend remains intact.
On January 30, XLM interacted with the horizontal support zone at $0.40, resulting in a 13% upward spike. This price action may signal the early stages of a new uptrend, but further confirmation is necessary before drawing definitive conclusions.
XLM Price Prediction: Key Levels and Fibonacci Projections
Turning to the one-hour chart, a more detailed outlook on XLM’s price structure reveals a developing five-wave impulse. If the current momentum continues, Wave 3 could potentially reach the 1.618 Fibonacci extension at $0.62. A full extension could push the price toward the $0.70 target area during Wave 5.
However, before these targets are reached, XLM may experience a corrective pullback, which would correspond to Wave 4. Support levels around $0.457—near the previous high in November—are likely to play a crucial role during this correction. The price may face resistance at this level once again before it can continue its upward trajectory.
In the longer term, if XLM manages to hold above $0.40, the bullish outlook remains intact. A decisive move beyond $0.50 would confirm the potential for an extended rally, with key resistance levels at $0.57 and $0.62 (the 1.618 Fibonacci extension) acting as the next hurdles.
While the bullish case remains strong, it’s essential to keep an eye on potential downside risks. If XLM fails to hold above critical support levels, deeper retracements could unfold. Key support areas to watch are $0.38 (the 61.8% Fibonacci retracement) and $0.343 (the 38.2% Fibonacci retracement). A breakdown below these levels could signal a shift in market sentiment and lead to further losses.
XLM is at a crucial juncture, with its recent bullish breakout from the descending wedge pattern being met with significant resistance. The price action suggests a short-term consolidation is likely as the market tests key support and resistance levels. Whether XLM can break above $0.50 and continue its upward trajectory or faces a deeper pullback remains to be seen.
Traders and investors should closely monitor the $0.40–$0.45 range for signs of support and resistance, as these levels will be critical in determining the next phase of XLM’s price action. If XLM can maintain its bullish momentum and break above the $0.50 resistance, the path toward new highs could be clear. Conversely, failure to hold key support levels could signal the end of the current rally, making the next few weeks critical for Stellar’s market outlook.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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