October 6, 2022


Disclaimer: The results of the following analysis are the author’s sole opinion and should not be considered investment advice.

stellar [XLM] Efforts to weaken the four-month trendline resistance (white, dashed) bear fruit as bulls flip it into support following the recent rally. The latest buying recovery calls for a rising wedge formation aimed at a retest of the $0.125 ceiling.

A convincing close above its current pattern would invalidate the bearish bias. The bulls need to increase their buying volume to maintain their continued buying momentum. At the time of writing, XLM is trading at $0.124, up 3.36% over the past 24 hours.

XLM daily chart

Source: TradingView, XLM/USD

XLM’s previous downtrend erased four-month-old trendline support (previous resistance) on the daily chart. However, buyers have regained momentum after falling to a 20-month low on July 13.

As a result, price action jumped above the recent moving averages. Even so, the 20 EMA (red) has yet to bullish beyond the 50 EMA (cyan) and confirm a strong rise in buying advantage. This crossover could increase the chances of a bearish invalidation.

If the $0.12 resistance reignites selling forces, the alt could see a downturn in the pattern. However, the Morning Star candlestick can help the bulls maintain their advantage. A close above $0.12 would open the door for a test of the $0.135 level.

However, a possible bearish recovery at the $0.12 mark could delay the near-term recovery prospects. Any close below the pattern is likely to have a weak phase near the point of control (POC, red).

Fundamental

Source: TradingView, XLM/USD

The RSI took a bullish stance, especially after turning the 57 mark into immediate support. Positions above this level would reflect an environment conducive to continued growth.

Additionally, OBV resonated with increased buying pressure, but was unable to replicate last week’s higher peak price action. Therefore, any reversal in OBV could confirm a bearish divergence.

The DMI line is showing a strong buying advantage, while the -DI line is still looking south. Nonetheless, ADX shows a rather weak directional trend for XLM.

in conclusion

Considering the rising wedge formation near the $0.125 ceiling, sellers will look to take advantage of them. A close above this resistance could encourage bearish invalidation. The goals will remain the same as discussed.

Finally, investors/traders should consider broader market sentiment and on-chain developments to make profitable moves.



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