Stellar (XLM) price broke out of a descending resistance line but failed to reclaim the $0.13 horizontal area. Its rise or rejection could determine the future trend. Price action on both the weekly and daily time frame shows that the trend is bullish and XLM will successfully break above the $0.13 area. RSI is also compatible with Stellar price analysis.
Stellar price bounce at long-term support
Weekly time frame technical analysis for XLM shows a mostly bullish outlook. The main reason for this is the breakout from the long-term descending resistance line in January and the subsequent recovery of the $0.105 horizontal area. Before this, the region served as support between April and October 2022.
XLM, which could not exit in April 2023, finally exited in July and reached a high level of $ 0.195. However, the price has since fallen, creating a long upper wick (red icon) in the process.
Despite the decline, XLM confirmed the $0.105 horizontal area and rebounded. Such a test is common after the price breaks out of the initial resistance level. XLM is currently trading around 20 percent above the $0.105 area and 80 percent below the next resistance at $0.230.
The weekly RSI is in an uptrend and supports the continuation of the rise. Investors often use the Relative Strength Index (RSI) as a momentum indicator to gauge whether a market is overbought or oversold, helping them decide whether to accumulate or sell assets.
During an uptrend, an RSI value above 50 indicates a positive position for the bulls, while an RSI value below 50 indicates the opposite. In this context, the RSI first rose above the 50 mark (highlighted by the green circle) in June and then confirmed this level as support in August (highlighted by the green icon).
While it is possible that the upcoming FTX liquidation could cause a bearish reaction, the company has not reported significant holdings of Stellar XLM.
Can XLM price sustain its breakout?
The daily time frame also presents a bullish view of Stellar XLM. However, this bullish prediction has not yet been confirmed due to the failure to reclaim a critical horizontal level. On September 4, XLM broke out of a descending resistance line that had been in place for 52 days. This was the culmination of an ongoing increase since August 16 (green icon).
Following the breakout, Stellar XLM reached a high of $0.135. However, yesterday's decline returned the price to the horizontal area of $0.13. The price needs to regain this area and confirm it as support for the trend to be confirmed as bullish. In this case, a 26 percent increase would be expected to the next resistance at $0.160.
However, the RSI has already started to rise. The indicator broke out of the descending resistance line (green) and moved above 50, both signs of a bullish trend. This rise could cause XLM price to drop below the $0.13 area to the $0.105 support area, despite the forecast. This will mean a decrease of 15 percent.
