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Trading activity since December 18 has spotlighted the fragility of even the most robust cryptocurrency bull runs, as digital assets faced significant volatility. However, despite recent downturns, market sentiment remains cautiously optimistic, with many investors eyeing a potential recovery in the coming weeks. Stellar (XLM) has emerged as a focal point for analysts, with technical indicators suggesting the token may be on the brink of a rally.

TD Sequential Offers Hope for XLM

Ali Martinez, a respected on-chain analyst, recently highlighted a bullish signal for Stellar using the TD Sequential indicator. This technical analysis tool identifies potential trend reversals or continuations by analyzing an asset’s historical performance. On December 22, Martinez shared that XLM is flashing a “buy” signal, suggesting a potential rebound toward its previous highs near $0.55.

For this rally to materialize, Stellar must hold above its critical support level at $0.33. Encouragingly, XLM is trading comfortably above this threshold, with a current price of $0.35977 at press time.

Challenges Temper Bullish Expectations

Despite the promising TD Sequential signal, the broader technical picture remains mixed. The Relative Strength Index (RSI), which measures momentum, is relatively neutral at 43.78, indicating that market sentiment is neither strongly bullish nor bearish.

Additionally, other indicators such as the Volume-Weighted Moving Average (VWMA) and the Hull Moving Average currently lean toward bearish sentiment, signaling a “sell.”

The most immediate hurdle for Stellar lies at its resistance level near $0.38. The token’s performance over the last 24 hours, which saw a 2.07% price decline, underscores the challenges ahead.

The Road Ahead

While Stellar’s technical setup offers hope for a near-term rally, the market remains in a state of flux. Investors should approach with caution, as XLM’s ability to break through resistance levels will likely determine its trajectory. For now, Stellar bulls can find solace in the token’s resilience above key support levels, but the journey to recovery is far from guaranteed.

Also Read: Stellar (XLM) Eyes Crucial Support at $0.3851: Is a Bullish Reversal Coming?

As the cryptocurrency market continues to navigate volatility, Stellar’s performance in the coming days will provide crucial insights into its potential for sustained growth.

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.