Stellar [XLM] recently rebounded from the long-term support near $0.08, helping the bulls to recapture the key moving averages on the daily chart.
The move helped XLM surge by about 12% over the past few days. At press time, XLM is trading at $0.0991.
With the 20 and 50-day EMAs converging and looking northwards, the bulls have a perfect opportunity to regain momentum.
Will the bulls hope to break the $0.1 resistance level?
XLM is currently above the 20-day and 50-day EMA at $0.0956.
If the 20-day EMA finds a comfortable close above the 50-day EMA and the moving averages continue to look north, XLM could challenge its 200-day EMA at $0.1027.
If this level is broken, the next immediate target will be the $0.103 resistance level and then the $0.1126 area.
It is worth mentioning that XLM has also broken above its long-term trendline resistance (dashed blue line), which turned into support during the recent rally.
The RSI has also been steadily climbing towards 59.15, showing increasing bullish momentum. However, the lower highs in the recent price action show a slight bearish divergence.
Therefore, we might see a bearish move in the short term before a recovery.
If the broader cryptocurrency market turns bearish or XLM fails to break out of the 200-day EMA, the altcoin could revisit the $0.08 support level.
In this case, the price action will show a descending triangle structure. Failure to defend the $0.08 level could result in a deeper correction towards the $0.075 level.
Derivatives data shows
XLM’s trading volume surged by more than 36% in the past 24 hours to $45.44 million, indicating relatively high trading activity. XLM’s open interest also increased by 3.17%.
Binance’s long/short ratio is 2.0075, with more traders currently choosing to go long. Similarly, OKX’s long/short ratio is 1.6, also reflecting buyer interest. This indicates bullish sentiment across major exchanges.
Investors should keep a close eye on the $0.08 support area and the $0.103 resistance level. A strong break above the latter could open the doors to test higher levels.
However, failure to sustain current levels could confirm the bearish pattern on the daily chart.
Furthermore, it is crucial to consider Bitcoin’s trend and overall macroeconomic sentiment before making any buying decisions.
