Since hitting its three-year high last year, Stellar (XLM) has tested its long-term trendline support and turned into resistance in December 2021. Since then, it found newer lows as the bears took over the driver’s seat.

A reliable close below the $0.195 support (white) would prime XLM for a near-term pullback. Post that, it would likely continue its breakout rally from the $0.17-$0.19 demand zone. At the time of going to press, XLM was trading at $0.1954, down 1.18% in the last 24 hours.

XLM daily chart

Source: TradingView, XLM/USD

Since XLM hit the $0.8 level, it has reversed downward and traded between the $0.19-$0.39 range for more than eight months. The recent bearish phase marked a down channel (white) on the daily chart as the alt lost close to 63.4% (as of November 10) and hit its 13-month low on February 24.

During this phase, the 20 EMA (red) formed a strong barrier for the bulls. They have been aiming for a sustainable shutdown above this level for over three months now. Meanwhile, XLM fell below a crucial area of ​​value on its Point of Control (red). The decline stopped at the 14-month support ($0.16), where buyers stepped in to kick off a 24.6% recovery leading to a down-channel (yellow) breakout.

With the recent gains, the bulls have created a strong demand zone between $0.17 and $0.19. This range has historically been a good trigger for a reversal. Can history repeat itself? If the price finds a close below the $0.195 level, a pullback towards $0.1906 may be conceivable before the alt picks itself up. Such a rebound could test the upper channel which also coincided with its 50 EMA (cyan).


Source: TradingView, XLM/USD

The RSI has been in an uptrend for the past nine days but still needed to close above the half-line to confirm the change in momentum. Also, the yellow trendline revealed a hidden bearish divergence with the price. This reading confirmed the possibility of a relapse to his support range.

Interestingly, the OBV has been in an uptrend for over a month now and is diverging from the price action. So a hint to underlying buying pressure that would open gates for a rebound from the USD 0.17-$0.19 level.


Taking into account the bearish divergence with RSI, XLM could see a pullback in the near term. After this, the OBV keeps hopes of a rebound from the demand zone alive. In addition, the investors/traders need to consider the broader market sentiment and the developments in the chain in order to make a profitable move.

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